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land sale in s corp

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    land sale in s corp

    4 shareholders, all have the same basis. part of the acreage was sold in the S corp. When I sell the acreage on the 8949,(form 1120s) do I put in the basis of all 4 share holders together, or do I not put in basis and shareholders put in their own basis on their individual return? Will this work with the K-1?

    #2
    Shareholders have Basis in the corporation. The corporation has Basis in the land. The shareholders do NOT directly have Basis in the land.

    So you need to clarify the situation.


    How did the land get into the corporation? Did the shareholders put money into the corporation and the corporation bought it? Did the shareholders already own the land and then contributed to the corporation? Something else?

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      #3
      When the corporation owns land and sells it, the basis is the corporation's basis -- which is usually what it purchased it for, plus any improvements. A partial sale of the land would show a pro-rata basis on the portion sold, usually using a per-acre ratio. This will result in a gain/loss which shows up on the K-1 for each shareholder based on their percentage interest in the S-corp. The remaining land then has a reduced basis. TGB's question is a valid one. Did the corp buy the land or did the shareholders contribute land they already owned to it?

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        #4
        original land owner died, 4 heirs inherited, a value was set on the farm, an s corp was formed and each one has 1/4of the total shares.
        There have been gains and losses on the scorp farm which has been passed to each shareholder by way of K-1, and there also have been a few equal distributions. Adding and subtracting, shareholder basis is not more that the original amount.

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          #5
          Shareholder basis in NOW more than original. (Error in typing)

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            #6
            The basis of the land, which you'll use on the S-Corp's Schedule D/Form 8949, should be on the books then at the value set when it became the S-Corp's asset. The clients are keeping proper books, right?

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              #7
              Yes, ok, thanks

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