Entering termination or qualifying disposition dates for a 1377(a)(2) or 1.1368-1(g)(2)(i) election (1120)

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If the corporation has made a terminating election under IRC 1377(a)(2) or a qualifying disposition of stock election under IRC 1.1368-1(g)(2)(i) to treat its taxable year as if this year consisted of separate taxable years, the first of which ends at the close of the day on which the shareholder's ownership changed, enter the date of change according to this procedure.

  1. Choose File > Open Client to open the desired S Corporation client.
  2. Choose View > Shareholder Information.
  3. In the Shareholder tab, click the Change of Ownership button.

    Note: The change in ownership must be performed before electing 1377 or 1368.

  4. In the IRC 1377 or 1368 Dates Only fields, enter the termination or qualifying disposition dates or select them from the drop-down list. The first day of the S Corporation's tax year cannot be used as a termination or disposition date.

Notes

  • After the IRC 1377 or 1368 election dates are entered in this dialog, UltraTax CS allocates all Schedule K items to the shareholders based on information entered in Screen 1377 in the Shr Allocation folder.
  • A Section 1377(a)(2) election statement automatically prints when the Termination, qualifying disposition explanation field is completed in Screen 1377, and one or more shareholders has zero shares at the end of the year.
  • A qualifying disposition of stock election statement under Regulation 1.1368-1(g)(2)(i) automatically prints when the Termination, qualifying disposition explanation field is completed in Screen 1377 and all of the shareholders own stock in the S Corporation at the end of the year.
  • A single election statement is permitted for all terminating elections made for the tax year.

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