1120-US: Shareholders listed in the consent to the S Corporations Section 1377(a)(2) election (FAQ)

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When the S Corporation makes an election under Section 1377(a)(2), all the affected shareholders must consent to the election. An affected shareholder is one whose interest is terminated and all of the shareholders to whom such shareholder has transferred shares during the taxable year. If the shareholder has transferred shares to the corporation, then the affected shareholders are all of the shareholders during the taxable year.

Therefore, UltraTax CS lists the following shareholders in the consent report:

  • Shareholder(s) who have zero shares at the end of the year.
  • Shareholder(s) whose shares increased from the beginning of the year.
  • If no shareholder(s) shares increased from the beginning of the year, then all of the shareholders listed in the View > Shareholder Information window.

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