Form 7203 is necessary if you are reporting a loss from your S-Corp or took a non-dividend distribution from your S-Corp. If either of these applies to your father, his returns will be held up in processing if the form is not provided.
If you did not invest money to "purchase" stock in the S-Corp, other activities of the business and you can still impact and raise the value of your basis. As you stated, S-Corp owners have always been responsible for tracking their basis, only now the IRS is requiring that information be reported.
Please see S Corporation Stock and Debt Basis for more specific guidance on completing the form.
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