How to enter liquidating distributions in TT premium

Forum|Forum|3 years ago
March 20, 2023
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I was one of 95 shareholder in a s corp. In 2022, we liquidated the sCorp through an asset sale. I received a K-1 with amounts or net capital gains, sec 1250 un recaptured gains, and net 1231 gains. There is also note that says I should subtract my stock basis from an amount given as liquidating distributions and enter the amount on schedule D. As far as I know, you don’t enter values directly on to Sch D in TurboTax, but I don’t know how to enter this information using the interview process in TT either. Also, this subtraction would result in a negative amount, and where on Sch D would this be entered if I could?

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Rick19744

Employee

A few comments:

As a shareholder in an S corporation, you should be tracking your stock basis.
You are correct in that you should not enter anything directly on Schedule D.
You will update your stock basis for the applicable lines on your final K-1.
When updating your stock basis for the final K-1, do not adjust the basis for any liquidating distribution. See next bullet.
Hopefully the liquidating distribution was reported to you on form 1099-DIV; which is the proper method to report this. It should not technically be on the K-1 as a distribution.
When you indicate that this is a final K-1 in TT, there will be some additional questions.
One of the questions will be how you disposed of the S corporation stock. Don't get hung up on semantics with the options as long as the end result is correct.
At some point TT will ask for the selling price (even though this was a liquidation). This amount is your liquidating distribution.
Then TT will ask for your cost basis. This is you stock basis.
You will enter the final K-1 amounts just as you have in past years.
TT will handle the rest
If you truly have a negative amount as you indicate, this means that you have a capital gain. So check for this on Schedule D.