Question

Death of Sole S Corp Shareholder

Forum|Forum|6 years ago
August 31, 2019
1 reply
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The sole shareholder in an S Corporation died in March 2018. There is no estate because the S Corp will pass to the spouse and children, once probate is complete. Should the 2018 return be prepared as though there was only the one shareholder for the entire year?

A

Anonymous_

Employee

You should absolutely seek an experienced tax and legal professionals for this scenario.

First of all, unless the shares of the corporation were held in a grantor trust or other qualified trust (e.g., qualified subchapter S trust or electing small business trust), then there definitely is an estate and the shares, as personal property of the decedent, are part of that estate.

Generally, though, there would be an allocation of profit or loss on a per share/per day basis with respect to the operation of the corporation and it shareholders. However, a competent tax professional may be able to make some adjustments and thus minimize any adverse tax consequences that may arise, so definitely consult with one prior to making any decisions.