The pro rata method assigns an equal amount of each of the S corporation items (e.g. ,LTCG)to each day of the year.

Question

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The pro rata method is used to allocate each of the S corporation items (such as income, deductions, and credits) evenly over each day of the year, regardless of when they occur. This ensures that each shareholder is allocated the correct portion of the S corporation's profits or losses for their ownership period.

The Pro Rata Method Assigns an Equal Amount of Each