S-corp loses SH - how to split year?

[schirallicpa]

I feel like I could do 2 returns but I don't know if I am supposed to.  The company gave me income and expense from boy to date the SH left.  And then gave me income and expense from that date to eoy. I've never done it that way.  I have always just let the system work the math by putting in the dates of the change of stock ownership.  

Thoughts?

[jklcpa]

Per share-per day is the method you've always used.  Splitting into 2 separate parts of the tax year is an election and requires signed consent of all parties.  You should calculate the effects on the pass-through items and on each shareholder's basis under each of the methods and allow shareholders to decide.  Does the shareholder agreement specify which method should be used in the event a shareholder leaves, dies, sells shares, etc?

A couple of (older) articles:
https://www.thetaxadviser.com/issues/2008/dec/allocatingpassthroughitemstoscorporationshareholders.html
https://www.thetaxadviser.com/issues/2010/dec/clinic-dec2010-story-09.html

[Abby Normal]

Do it the way you've always done it and see how close the income split is to the separate accounting they've given you. If it's at all close, it's not worth all the additional work to do the separate accounting.

[schirallicpa]

16 hours ago, Abby Normal said:

Do it the way you've always done it and see how close the income split is to the separate accounting they've given you. If it's at all close, it's not worth all the additional work to do the separate accounting.

yep - it will be close

[DANRVAN]

22 hours ago, schirallicpa said:

The company gave me income and expense from boy to date the SH left. 

They are asking you to elect the interim closing of the books method.  It will match income and expenses to the time period of ownership.  Therefore it is more equitably unless income and expenses are even throughout the year.

Unlike S-Corps, partnerships must use the interim closing method unless an election is made to use the proration method,