Two shareholders, each own 50%
The balance in their Scorp AAA account was approx 5 million on 12/31/23.
Their total Stock outside basis was also approx the same, ie, 5 million.
On 1/31/24, Shareholder A paid Shareholder B 4 million for her shares. and shareholder B exited the company.
On shareholders B 2024 1040 I will report gain on sale of stock 1.5 million (4 million sale price less her share of basis 2.5 million)
Shareholders A outside basis in his shares after the sale is 6.5 million (his half of original 5 million basis plus the 4 million he paid to buy her out)...correct?
For simplicity's sake, let's say that at year end 2024, the net profit/loss for the entire year of 2024 is zero and there were no Shareholder draws for 2024.
Do I make any adjustment to the AAA account for the stock sale transaction?
Thanks
The balance in their Scorp AAA account was approx 5 million on 12/31/23.
Their total Stock outside basis was also approx the same, ie, 5 million.
On 1/31/24, Shareholder A paid Shareholder B 4 million for her shares. and shareholder B exited the company.
On shareholders B 2024 1040 I will report gain on sale of stock 1.5 million (4 million sale price less her share of basis 2.5 million)
Shareholders A outside basis in his shares after the sale is 6.5 million (his half of original 5 million basis plus the 4 million he paid to buy her out)...correct?
For simplicity's sake, let's say that at year end 2024, the net profit/loss for the entire year of 2024 is zero and there were no Shareholder draws for 2024.
Do I make any adjustment to the AAA account for the stock sale transaction?
Thanks
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