Any harm in just starting with a zero basis on Form 7203 if your Scorp had enough income in the year to offset distributions and other deductions so no worry of capital gains?

[IHaveABigQuestion]

Any harm in just starting with a zero basis on the company's first Form 7203 if your Scorp has enough income to offset distributions? No losses, no debts ever and no plans to ever sell stock or the business. Just income that will always be more than the distributions and other deductions so no worry of capital gains. It would just be easier to start with zero basis but not sure if I am missing anything that matters. 

[Anonymous_]

I will page @Mike9241 since he answered a question re this form earlier. Stay tuned.

[DaveF1006]

No. If you had no basis in the beginning of the year then you may start with a zero basis and report that on Line 1 of the 7203. Your stock basis at the end of the year is determined by the entries you make in PART 1, LINES 1-15. From here, you either have an increase in basis or your basis is zero. The stock basis balance is never negative. It is not mandatory for you to have a basis in the beginning of the year. 

Part 2 of the 7203 is a declaration of your debt basis and your loan balances in the beginning and end of the year. Part 3 is a declaration of your share of loss and deductions that is reported by the S-Corp. 

S corporation shareholders use Form 7203 to figure the potential limitations of their share of the S corporation’s deductions, credits, and other items that can be deducted on their individual returns. The only reason why it is required is to prevent you from taking a loss that is greater than your investment. Please read this Turbo Tax link for further information.

@IHaveABigQuestion
 

[Mike9241]

the only harm MIGHT come in the future should you dispose of the S-Corp. either by selling the assets and liquidating or selling your stock.   if you don't know your basis, how do you correctly any gain or loss?  the longer you wait the harder it will be because records are not always kept going back to day one. but it's a risk many probably do take. should the S-Corp ends up being inherited your basis becomes irrelevant.