Allowed loss amounts on form 7203

Forum|Forum|3 years ago
April 14, 2023
2 replies
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Are allowed loss amounts on form 7203, column C suspended and a PAL generated and reported on 8582 for a passive shareholder when there is no other passive income?

Mike9241

Level 15

surprise the 7203 doesn't work to limit losses. it merely info for the IRS so it can see what's supposed to be and what you did. Passive loss from an s-corp k-1 flows directly to the 8582 to determine allowed and suspended. losses. that has nothing to do with the 7203 which is a tax basis computation. even if a loss is suspended for PAL purposes it reduces tax basis. if you have losses in excess of tax basis that creates a more complicated entry requirement so that only the proper mount of loss is deducted through the 8582

Mike9241

LXXVIIAuthor

Level 4

@Mike9241 Yes, loss limited by basis — column c shows allowed amounts. If passive activity, and no other passive income, then these allowed amounts (Column C) are suspended by passive loss rules, correct?