Client/Shareholder/Officer Info & Stock Ownership

Prerequisites You should be familiar with or have completed the Interactive Input exercise in the Input Techniques section (Program Operations tutorial). Objective In this exercise, you will enter client/shareholder/officer information and stock ownership.

LESSONS Client/Shareholder/Officer Info & Stock Ownership Misc./Other Info Income & Related Items Balance Sheet & M-1/M-2 Distributions & Basis Info Change in Ownership K-1 Overrides Section Review

Facts

Enter the following information for a sample client:

Client number

TUTSCOR1

Client Information	Data entry:
Corporation Name	Tutorial S Corporation 1
Corporation DBA	Lesson 1
Fiscal year end	12
S Effective date	01/01/1999
Accounting method	Cash
TMP Shareholder#	1

Shareholder Information	Data entry:
Shareholder 1 Name	Shareholder 1
Shareholder 2 Name	Shareholder 2

Officer Information	Data entry:
Officer Name	Officer Title	Compensation	Percentage of Stock
Shareholder 1	President	$100,000	85
Shareholder 2	Chairman	$45,000	15

Both officers are directors.

Stock Ownership	Data entry:
Shareholder Name	Number of Shares Owned at Year End
Shareholder 1	136
Shareholder 2	24

View Form 1120S and the Schedule K-1's. Note the automatic completion of the number of shareholders
(line G) on Form 1120S and the Shareholder's percentage of stock ownership (line A) on each Schedule K-1.

Program Considerations

Client Information

• Mandatory Client Information entries are:

  S corporation Name	Date Business Began (m/d/y)
  Federal Identification Number	Effective Date of S corp Election (m/d/y)
  Street Address	Business Code
  City	Business Activity
  State	Product or Service
  ZIP Code	Location of Accounting Records
  Date Incorporated (m/d/y)	IRS Center
  Where Incorporated	TMP Shareholder Number

  The program uses the Client Information entries to complete various parts of the return.

• The program determines the beginning and ending dates of the fiscal year based on the entry in the Fiscal Year End field. Enter the month for the fiscal year end (the program defaults to 12).
• Select cash, accrual, or other as the accounting method used by the corporation. If the accounting method is other than cash or accrual, you must enter an explanation in Other Method (Screen 1).
• Enter the program-assigned number of the shareholder who acts as the tax matters person (TMP) for this S-Corporation. Although the federal program no longer uses this entry, some states use this field for the individual to contact for tax matters.

Shareholder Information

• The program assigns each shareholder a number based on the order shareholders are entered and based on the option for Subclient Addition. This option is found in the Program Options section of the Setup tab and allows you to determine the order in which the program adds new shareholders. You can select Append to End to add new shareholders to the end of the existing list. The program assigns the next highest available number. You can select First Available Slot to add new shareholders in the lowest available position in numeric order. If gaps exist in the current numbering, the program assigns new shareholders the numbers within the gaps before adding shareholders to the end.
• The following Shareholder Information entries are mandatory:

  Shareholder Name	Identification Number
  Street Address	City
  State	Resident State
  ZIP code

  If the entire address is too long to fit on the form, the program prints as many characters as possible. The program does not abbreviate the address.

Stock Ownership

• Enter the number of shares owned by the shareholder at the end of the tax year. The program calculates the shareholder's percentage based on the total number of shares entered for all shareholders. It then uses the resulting percentage to calculate the shareholder's distributive share of items on Schedule K-1. If you make an entry in Percentage of Stock Owned at Year End or K-1 Allocation Percentage, it overrides the program calculation. If the shareholders' percentages do not equal 100%, the program generates a diagnostic warning.

Officer Information:

• Enter the applicable officer information to print on the officer and director schedules and the optional officer compensation statement. If the option for Officers Schedule is set to Yes, the program creates schedules listing the officers and directors.

How?

To enter and add sharheholders:

1. Add the sample client.
2. Open the Sharholder Information screen from the Contents tab.
3. Enter the applicable information from the Shareholder Information table above for the first officer.
4. Click Add in the Shareholder list to add additional officers.

   To enter Officer Information and Stock Ownership, open their respective screens from the Contents tab and enter the applicable information from the tables above. The Stock Ownership screen cannot be opened until shareholders are entered.

Tips & Shortcuts

• You can press [Ctrl]+[A] to add shareholders.
• When viewing Form 1120-S, you can simply press the number of the page you want to view.

Review

You should have entered Client Information, Shareholder Information, and Officer Information in their respective input screens for the sample client and produced the following on each Schedule K-1:

• Shareholder 1: Line H - 85%
• Shareholder 2: Line H - 15%

Troubleshooting

Problem: Line H on Schedule K-1 is not completed.

Solution: Verify that the number of shares has been entered for each shareholder.

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