What method is used to allocate S corporation income or losses (unless an election to the contrary is made)?

Question

Quizplus · Accepted Answer

Unless an election to the contrary is made, S corporation income or losses must be allocated to shareholders on a per-day basis. This means that income and losses are allocated based on the number of days each shareholder held stock in the corporation during the tax year. This method ensures that each shareholder is only taxed on the income they earned or responsible for the losses they incurred while they held a ownership stake in the corporation.

What Method Is Used to Allocate S Corporation Income or Losses