Form 7203 Stock Block

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We have a loss reported on our K-1 Form 1120-S for 2023. Turbo Tax is requiring Form 7203 to be completed. How do we answer the Stock Block line (Item C)? Is the basis calculated using end of year 2022 valuations or the valuations at the time of stock acquisition? How could this potentially affect our tax liability?

Mike9241Answer

Level 15

end of 2022 tax basis + any additional capital contributions or loans made during 2023. if all stock was acquired at the same time use 1 for the stock block.

as long as you have enough tax basis in all the stock the loss will be allowed in full. it's a matter of allocating the loss among the blocks which is only relevant if some of it is sold or gifted.

Mike9241

Answer

Level 15

end of 2022 tax basis + any additional capital contributions or loans made during 2023. if all stock was acquired at the same time use 1 for the stock block.

as long as you have enough tax basis in all the stock the loss will be allowed in full. it's a matter of allocating the loss among the blocks which is only relevant if some of it is sold or gifted.

Mike9241