What is the reporting requirement for a corporation that purchased back its stock from a shareholder? Would it be on a 1099-DIV? The corporation was not liquidated. The stockholder received $300,000 more than his S basis and SH loans. Would the $300M be on 1099-DIV lines one and two and the basis on line 3? Any help would be appreciated.
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Since it is an S corporation, the distribution should be reported on the K-1, box 16, Code D for property distribution. I would also make an entry in box 17, Code N and attach an explanation of the excess basis issue. That should be sufficiant to prepare the 1040 with the capital gain info.
I don't see anything in the 1099-DIV or 1099-B instructions saying to report redemptions on those forms.
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