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1120-S K-1 number of shares?

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November 7, 2022
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The K-1 for the 1120-S starting in 2020 has boxes for number of shares at beginning and end of tax year. The 2021 K-1 wants the shareholder's number of shares as well as the corporation's total number.

Our S-Corp is an LLC and is owned by my wife (51%) and myself (49%). I don't remember anything about having stock or issuing shares since we set it up.

How would I enter these values? Can I just say it has 100 shares and my wife has 51 and I have 49? Can I leave these boxes blank?

For the new 7203 I've kept track of basis on Schedule M-2 every year. This is just in dollars.

Thanks!

TurboTax Business Windows

Best answer by Anonymous_

Thanks for your reply. This sounds good- I'll enter in box D 100. I'll enter in box H 49 for me and 51 for my wife corresponding to our percentages in box G.

I hope it will be obvious to the IRS what's happening because our name in box B has 'LLC' after it.

And I think the 1120-S K-1 instructions should have a paragraph or so treating LLC's that have elected S-Corp status. If you search the instructions for 'LLC' there are no hits :-(.

@avjunior

See https://www.irs.gov/instructions/i1120s#en_US_2021_publink100077082

Item D

Report the total number of shares issued and outstanding at the beginning and end of the S corporation’s tax year. An entity without stock, such as an LLC, should enter the number of units or other equivalent to S corporation stock. Round the number of shares to the nearest whole number (but not below zero). For example, round 0.6315 up to 1.

M

Mike9241

the 7203 is not asking for shares it's asking for block number (not the number of shares) - leave blank or enter 1 for each of you since this is an LLC that evidently elected to be taxed as an S-Corporation it's unlikely that state law would require shares to be issued. but that's a legal question.

the instructions for the 7203 doesn't address the issue of an LLC that elected to be taxed as an S-Corp but under state law is not required to actually issue stock.

this is all the instructions say

Stock block. When a
shareholder has a different
basis in different blocks of
stock, pass-through items are
generally allocated pro rata to all
shares, regardless of their different
bases. If there is a partial stock sale or
partial redemption, you may file more
than one form and provide a
description of what period the form
covers. See Regulations section
1.1367-1(b)(2) and (c)(3) for details.

A

avjuniorAuthor

Yes you are correct- we are an LLC that elected to be taxed as an S-Corp. From googling it seems that LLC's cannot have or issue stock.

It would appear the instructions for the 1120-S K-1 doesn't address our case of being an LLC?

I'm inclined to leave the new K-1 Boxes D and H empty.

A

avjuniorAuthor

I did find one article that addressed what an LLC should do for K-1 boxes D and H. It said an LLC without stock should enter "number of units or other equivalent to S-Corp stock".

Have no idea what this means.