Where to Enter Stock Ownership Changes in Lacerte
Ownership percentages are entered on screen 6, Stock Ownership. When ownership changed during the year, screen 7, Change in Stock Ownership, records the change so income is allocated across the period each shareholder actually owned the stock. Those percentages also drive how a single distribution total on screen 8 is split between shareholders.
- Detail
- Screen 6, Stock Ownership
- Screen 7, Change in Stock Ownership
| Trial balance account | Lacerte screen and field | Lands on |
|---|---|---|
| Ownership percentages | Screen 6, Stock Ownership | Every K-1 allocation |
| Mid year ownership change | Screen 7, Change in Stock Ownership | Per share per day allocation |
| Distribution split | Screen 8 total, split by screen 6 percentages | K-1 box 16 code D |
| Shares bought back by the company | Treasury stock on the balance sheet screen | Schedule L line 26 (1120-S) |
| Shareholder basis after a change | Screen 9, per shareholder | Form 7203 on the shareholder return |
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Try it freeWhere to Enter Stock Ownership Changes in Lacerte on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 42,800.00 | |
| 1200 | Accounts receivable | 68,500.00 | |
| 1300 | Inventory | 55,000.00 | |
| 1500 | Equipment | 145,000.00 | |
| 1510 | Accumulated depreciation | 47,500.00 | |
| 2000 | Accounts payable | 28,400.00 | |
| 2100 | Accrued expenses | 9,200.00 | |
| 2400 | Notes payable | 92,000.00 | |
| 2450 | Due to shareholder | 15,000.00 | |
| 3000 | Common stock (the account this page is about) | 10,000.00 | |
| 3900 | Retained earnings | 86,300.00 | |
| 3950 | Shareholder distributions | 52,000.00 | |
| 4000 | Gross receipts | 612,000.00 | |
| 5000 | Cost of goods sold | 318,000.00 | |
| 6000 | Salaries and wages | 88,000.00 | |
| 6050 | Officer compensation | 72,000.00 | |
| 6300 | Depreciation expense | 21,500.00 | |
| 6900 | Other operating expenses | 37,600.00 | |
| Total | 900,400.00 | 900,400.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Treasury stock | 30,000.00 | |
| Cash | 30,000.00 |
Two screens, and the second one is easy to miss
Screen 6 holds the ownership percentages. If ownership changed during the year, screen 7 records that change, and Lacerte allocates income across the periods rather than applying one percentage to the whole year.
Skipping screen 7 produces K-1s that allocate the full year on the year end percentages. For a shareholder who joined in October, that overstates their share of the year's income substantially, and the error is invisible on the face of the return because the total still ties.
What an ownership change actually affects
More than the K-1 percentages:
- Income allocation, which by default is per share per day across the year
- Distributions, because a single total on screen 8 is split using the screen 6 percentages, and a distribution made before the change should follow the old percentages
- Each shareholder's basis, which is personal to them and starts from what they paid
- The equity section, if the company itself redeemed the shares rather than a shareholder selling to another shareholder
Redemption or sale between shareholders
The difference matters and the books usually do not record it clearly.
If the company bought the shares, that is a redemption: cash left the company, equity went down, and treasury stock appears on Schedule L line 26. If one shareholder bought another's shares personally, nothing happened on the company's books at all, and a payment running through the company account is a distribution to the buyer rather than a company expense.
A payment to a departing shareholder sitting in an expense account is the version of this that changes taxable income, and it is common.
The election worth knowing about
When a shareholder's interest terminates completely during the year, the parties can elect to treat the year as two separate short periods for allocation purposes rather than using the per share per day default. That changes who is taxed on what, particularly for a company with an uneven year.
It is a decision rather than a data entry step, and it is better made before the K-1s go out than after.
Tax return treatment
| Form | Line |
|---|---|
| Form 1120S | Schedule K-1 allocations, and Schedule L line 26 for treasury stock |
| Form 1120S Schedule B | Ownership questions, with the K-1s showing each shareholder percentage |
Common questions
Where do I enter stock ownership in Lacerte?
Screen 6, Stock Ownership. If ownership changed during the year, screen 7, Change in Stock Ownership, records the change so income is allocated across the periods rather than on the year end percentages.
What happens if I skip the change in ownership screen?
Lacerte allocates the whole year using one set of percentages, so a shareholder who joined partway through the year gets too much or too little income. The return still foots, which is why the error is easy to miss.
How is a shareholder buyout recorded?
It depends who bought the shares. A company redemption reduces equity and shows as treasury stock on Schedule L line 26. A purchase by another shareholder personally does not touch the company books, so a payment run through the company account is a distribution rather than an expense.
Do distributions follow the ownership percentages?
Yes. A total entered on screen 8 is split between shareholders using the screen 6 percentages. When ownership changed mid year, a distribution paid before the change should follow the percentages in effect at the time, which may need a specific allocation rather than the default.
Related answers
Go deeper
This page is the short answer. These articles work through the same ground in detail.
Last reviewed October 18, 2026.