Shareholder's Basis Computation Worksheet

[PTGeek]

I have read some other threads on Shareholder Basis and have a follow up question. 

I understand that TurboTax does not have a way to file the basis worksheet electronically (ridiculous by the way). So according to form 7203 under "who must file" you only need to file this worksheet under certain circumstances. Under "TIP" they recommend using it to maintain basis info. 

So if I am understanding this correctly, I am filing my K-1 (form 1120s) electronically and hanging on to my 7203 for my records and future basis calculation??? 

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[tagteam]

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@PTGeek wrote:

So if I am understanding this correctly, I am filing my K-1 (form 1120s) electronically and hanging on to my 7203 for my records and future basis calculation??? 

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Retain your K-1 (1120-S) for your records. You do not file your K-1 with your 1040 unless backup withholding is reported in box 13 using code O.

Form 7203 is new and you also do not file it with your return except under certain circumstances.

See https://www.irs.gov/pub/irs-dft/i7203--dft.pdf

[ThomasM125]

You are correct. The IRS does not track your basis in your S corporation investment, but you need to do so as you will need to report it when you dispose of your interest in the investment. It is also needed to determine if distributions are taxable or losses are deductible in many instances. 

[Mike9241]

this form may need to be filed with your return. it has an attachment sequence which means it must be included with your return if you meet any of the criteria for filing it. here's are the filing instructions

Who Must File
Form 7203 is filed by S corporation shareholders who:
• Are claiming a deduction for their share of an aggregate loss from an S corporation (including an aggregate
loss not allowed last year because of basis limitations),
• Received a non-dividend distribution from an S corporation - an amount in box 16 with code D.
• Disposed of stock in an S corporation (whether or not gain is recognized), or
• Received a loan repayment from an S corporation - an amount in box 16 code E

[AmeliesUncle]

In MOST cases it needs to be filed with your tax return (most shareholders receive a Distribution, and those who don't receive a Distribution usually don't because the business is running at a loss, which also usually requires the form).  

But in the event you are not required to file it, yes, just keep track of your Basis for when you ARE required to file it.

[PTGeek]

I did take a cash distribution but that does not seem to be one of the "who must file" criteria? 

This is confusing to me because if you read the responses to my question, most say the 7203 is for my records but one person says I need to file it.... taxes should not be this confusing 🙂

Not sure if the cash distribution changes the answer? 

TIA

[tagteam]

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@PTGeek wrote:

I did take a cash distribution but that does not seem to be one of the "who must file" criteria? 

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Distributions for an S corporation would be dividend distributions if the distribution was from accumulated E&P and the only way your corporation would have those would be if it was formerly a C corporation.

Otherwise, S corporation distributions are non-dividend distributions. 

[PTGeek]

ok.

so that means I took a non-dividend distribution and now I MUST file the 7203. 

Still insane that TutboTax does not include this on the s corp online filing. 

thanks for the clarification 

[tagteam]

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@PTGeek wrote:

Still insane that TutboTax does not include this on the s corp online filing. 

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The form is not (yet) available in their professional software either.

[Rick19744]

Requiring this information is not new.

Before this form was developed, S corporation shareholder's were required to file this same information with their 1040, except, there was no specific form.  See snippet from the Schedule E instructions:

Owners of S corporation stock and debt. If you report a loss, receive a distribution, dispose of stock, or receive a loan repayment from an S corporation, you must check the box in column (e) on line 28 and attach the required basis computation.

And if I'm not mistaken, TT did not have any way of attaching this information in the past.

Given this is now an actual form, I would imagine that TT will eventually provide this form.  We also have to keep in mind that this form 7203 is brand new and still in draft form.  The IRS may not even be set up to accept electronic filing of this form; this is an assumption, but given their staffing situation and that this is brand new, not a huge stretch.

[lmr57]

So if TT Home and Business does not have form 7203 S Corporation Shareholder Stock and Debt Basis Limitations Available for completing or listed as a drop down form to complete and I received non-dividend distributions from my S-Corp listed on my K-1, does that mean that I can not use TT to e-file this year?  I don't want to file without the form if it is required but it is not even listed on the available forms now.  Is there a plan at TT to add this - do I hold my return?  Thanks.  The program did not even ask me any questions about basis or distributions other than when I put in my K-1 information.

[tagteam]

@lmr57 

Is that form still not in draft mode? I believe it is.

[lmr57]

I believe it has been finalized.

[tagteam]

I believe you are correct. 

However, since it appears it was finalized in December, the form still has to be approved for use in the program.

[tagteam]

The forms availability list indicates Form 7203 will be available on 3/31/2022. Print only.