S Corporation Preparation, Basis Calculations & Distributions - Form 1120S Schedule K & K-1 Analysis

Overview

This comprehensive training is designed to get the accountant up to speed quickly with S corporation formation and preparation issues as well as a complete understanding of calculating a shareholder’s stock and debt basis. The cornerstone of this course is the in-depth line-by-line analysis of the Form 1120S Schedule K and K-1 and how these items affect the shareholder’s Federal individual income tax return.

**Please Note:  If you need credit reported to the IRS for this IRS approved program, please download the IRS CE request form on the Course Materials Tab and submit to kori.herrera@acpen.com

Prerequisites

Background in S corporation and individual income tax law

Objectives

• Form a S corporation and calculate the corporation’s initial inside basis in the assets and shareholder’s stock and debt basis
• Prepare a basic S corporation (Form 1120S) Schedule K & Schedule M-2 including the reporting of cash and non-cash distributions 
• Understand how the schedule K items get allocated to the shareholders on their individual Schedule K-1
• List the three main reasons for calculating a shareholder’s basis in a S corporation
• Calculate a shareholder’s stock and debt basis and determine if losses and deductions are limited on their individual income tax return

Highlights

• Extensive review of the S corporation tax laws with an emphasis on any new legislation 
• Review the Form 1120S and discuss how items get reported on the S corporation tax return (i.e. page 1 versus Schedule K) and flow-thru to the shareholders on their schedule K-1
• Analyze the Schedule K-1 line-by-line and discuss where the items get reported on the individual’s Federal income tax return and how the items affect the shareholder’s stock and debt basis
• Look at detailed Schedule K-1 information reporting to shareholders needed for the qualified business income (QBI) deduction, 3.8% net investment income tax and business interest expense limitations
• S corporation formation issues under IRC §351
• Tax ramifications and reporting of distributions at the S corporation level including when the S corporation has prior C corporation earnings and profits (E&P)
• Preparation of the Schedule M-2 and the ordering rules for distributions out of the AAA, PTI, E&P and OAA accounts