An S shareholder who dies during the S corporation tax year must report his or her share of the pro rata income (loss) items up to the date of death, on the final individual tax return.

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This is true. Upon the death of an S corporation shareholder, their share of income (or loss) up to the date of death must be reported on their final individual tax return. The remaining share of income or loss for the tax year is reported on the shareholder's estate tax return.

An S Shareholder Who Dies During the S Corporation Tax