form 7203

[holly_s]

Trying to fill out form 7203 because I have something entered in line 16 on my schedule k1.  Where do I enter this infomation?  My shareholder worksheet puts it under reduction for non taxable distributions.  Thanks

[Mike9241]

that is correct your tax basis in an S-Corp goes up by income but down by those nontaxable distributions

example extremely simplified. 

starting basis $1K - cash. income $5K - all cash. now tax basis is $6K - all cash. nontaxable distributions (basically the income being distributed to the owner) $5K- all cash. now basis is back down to $1K which is the cash 

[holly_s]

what line do I enter the information from line 16D on the form 7203?

[PatriciaV · Accepted solution]

This info goes on Form 7203 Line 6. According to IRS Instructions for Form 7203, for Line 6: Enter the distributions reported on Schedule K-1 (Form 1120-S), box 16, code D.

Note. If the amount of the distribution is more than the stock basis before distributions, report the excess amount as a capital gain on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D. Don’t increase your stock basis for the amount of capital gain reported for the excess. See Nondividend distributions in the Instructions for Form 8949.

@holly_s 

[Eileen12]

 You stated, "If the amount of the distribution is more than the stock basis before distributions, report the excess amount as a capital gain on Form 8949, Sales and Other Dispositions of Capital Assets, and Schedule D."  Does Turbotax automatically report Form 7203 line 34 reportable gain to Form 8949 and Schedule D?  

[holly_s]

Thank you for your help

[JamesG1]

IRS form 7203 line 34 computes Reportable gain on loan repayment.  I am not seeing the gain reported automatically on an IRS form 8949 / Schedule D Capital Gains and Losses. 

The same entry was made on both TurboTax CD/Download Premier and TurboTax Premier Online.

@Eileen12

@holly_s