Tax Guru – Ker$tetter Letter

Q:

Subject: general question

Hi Kerry,

I have a general question pertaining to S-corps and taxes. I came across your website in my search for answers. I’m hopeful you may assist.

I have a S-Corp and the IRS recently requested I send a 1040 form for a previous year.

Must I complete the 1040 form using all of my information from the S-Corp filing – (redundancy) or may I use just my K-1 schedules and fill in the 1040.

The IRS has my S-corp submissions

Thanks Kerry for your thoughts

A:

I don’t mean to pick on you here, but you appear to be a perfect example of getting in over your head by setting up an S corp without knowing how they function tax-wise, as well as trying to handle your taxes without the assistance of a professional tax advisor.

If your S corp’s 1120S was prepared properly, its K-1 should have all of the information that needs to be entered onto the various schedules of your 1040.  There is no need to enter the individual income and expenses items that are shown on the 1120S.

Before you prepare your 1040 for 2004, you should have a professional tax advisor review the 1120S to make sure that doesn’t need to be amended.  S/he should then be used to prepare your 1040 for that year as well.

Good luck.

Kerry Kerstetter