Form 7203 has me stumped.

[buddybeeken]

I am a shareholder in my family farm which is now an Inc.  Form 7203 is new and I don't know how to fill in the info they need.  What is a stock block if I have never "purchased" any stocks.  I have a 25% allocation which is 25 shares.  But no money has ever changed hands so I'm not sure how to answer some of these questions.

[AliciaP1]

Form 7203 is used to report your value in the stocks you own.  A stock block is a group of stocks purchased (or allocated as you have stated) at 1 time.  So, in your case, you have 1 stock block.  If you had the initial allocation and had then purchased another group later, you would have 2 stock blocks.

See S Corporation Stock and Debt Basis for more details on how to track your basis for the form.

[vawarrior]

Link S Corporation Stock and Debt Basis contains details on calculating Stock Basis, but it does not provide details for computing Debt Basis. Please provide information (examples) to assist in computing Debt Basis.

[AliciaP1]

This is your best resource to get your specific situation reported correctly.

S Corporation Stock and Debt Basis

@vawarrior

[vawarrior]

Unfortunately, this link contains no information on calculating Debt Basis.

[AliciaP1]

At the bottom of the guidance, the following is listed regarding debt basis:

• A shareholder is only allowed debt basis to the extent he or she has personally lent money to the S corporation. A loan guarantee is not sufficient to allow the shareholder debt basis.
• If a shareholder contends he or she has contributed or loaned substantial funds to the S corporation, consideration should be given to whether the shareholder had the financial means to make the contribution or loan.
• Part or all of the repayment of a reduced basis debt is taxable to the shareholder.

If you loaned the S-Corp money in return for stock in the company during 2021 it still counts as a contribution.  If it was loaned prior to 2021, the value of the outstanding balance is part of your beginning basis amount.  Your basis is still decreased by any amount of the loan the S-Corp has paid back to you.

@vawarrior