Why does 1120-S K1 does not capital account analysis? I can understand this for 1041 K1.
In any case, the company's analysis of capital account may be incorrect? But how could this happen? I can see this might happen when you exchange depreciated property for shares, but if the company's shareholder ledger is well maintained, it should always be
Simply put, a shareholder's basis (called outside basis) may start with what he paid another shareholder for stock. it's not always a case of a shareholder paying the corporation for capital stock. And of course the corporation has no way of tracking this.
ChEAr$, Harlan Lunsford, EA n LA
But isn't this true also - and exactly the same - for a partner in a partnership? But the partnership returns show capital accounts...
Good point. Maybe the reason is the partnerships can make a 754 election and S Corps can't (or can they)? Or maybe it's just that way for illogical historical reasons.
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