Your basis is reduced regardless of whether you are able to take the losses due to the passive activity limitations.
So you reflect the loss on form 7203 to the extent it does not cause basis to go below zero.
Form 7203 is the IRS attempt to have a consistent S corp basis reporting form.
If you have no basis to take the loss, then the loss is not reported and does not even flow to the 8582. These forms serve different purposes.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
