Stock Basis for first year S-Corp?e

[maruuruguay]

Hello everyone -

How do we calculate (for the first time) our stock basis as shareholders for our S-corp?

We switched to S-Corp tax status beginning 01/01/2023 after filing as a regular LLC for 7 years. Money transfered from the business was simply recorded as Owners Draw (Equity) and zeroed out every 01/01 against Retained Earnings. 

Do I need to calculate Stock Basis as of 01/01/23 or 12/31/22? Do I need to calculate it for all years prior even when we were just an LLC?

Any help would be appreciated!

[RobertB4444 · Accepted solution]

Your basis in the company is the same as your investment in the company.  Since you have converted over you will need to go back through the period when you were an LLC and add up all the contributions from each member over that period.  That includes any profits from the LLC that were reinvested into the company instead of being withdrawn.  Those investments make up the initial basis in the S-Corp.  Then, going forward, the system will track your basis for you.

@maruuruguay