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Level 3
posted Sep 3, 2023 4:39:18 PM

Form 7203 equivalent for 2020 - how to show Shareholder's Basis in S Corp?

Hello tax pros!

 

Hope you are all well. I have the following situation:

  • Right now, I'm doing 2020 personal taxes (I have extensions, no balances due, and am owed a refund) via TurboTax Premier 2020.
  • I have a single member LLC elected to be S-Corp.
  • I filed the 2020 S-Corp 1120-S on time a few years ago - it had a loss of $13,000.
  • I have the 2020 Schedule K-1 (Form 1120-S).
  • In TurboTax Premier, I have added the information from the Schedule K-1 as part of my Schedule E (Form 1040)
  • I will be printing my return from TurboTax and mailing it in since I can no longer file electronically.
  • The instructions at the top of 2020 Schedule E (Form 1040) say the following:
    • Income or Loss From Partnerships and S Corporations — Note: If you report a loss, receive a distribution, dispose of stock, or receive a loan repayment from an S corporation, you must check the box in column (e) on line 28 and attach the required basis computation.

 

Questions:

  1. According to the instructions at the top of 2020 Schedule E (Form 1040), I also have to attach the required basis computation.
    • Questions:
      • It looks like this should be done via IRS Form 7203, but that only came out in 2021, so it wouldn't be available in TurboTax Premier 2020?
      • For 2019, my former tax preparer used UltraTax CS "Form 1040 Shareholder's Basis Worksheet Page 1" and "Page 2", and "Schedule E K-1 Reconciliation Worksheet - Qualified Business Income" to show basis - where do I find these equivalent forms in TurboTax or on the IRS website or any other site?
      • Since I will be printing and mailing in my return, am I allowed to download these additional forms from IRS website and fill them out and include them with my return?
  2. On 2020 Schedule E (Form 1040), Part II, 28(e) is a checkbox that says: "Check if basis computation is required" - this box should be checked as per the instructions on that form (because the S Corp has a loss), BUT IT IS NOT CHECKED and I cannot find a way to check it in TurboTax.
    • Question: Can I print out my return in TurboTax and use a black pen to check that checkbox before mailing in that return?

 

Thank you all so much for any help or advice you can provide.

 

Best regards,

f404

0 4 1857
1 Best answer
Level 15
Sep 4, 2023 9:40:08 AM

@f404 the current 7203 is undated so I would just use that and write in 2020 in upper right.  for 2020 there is nothing specifying the format of the basis comp as long as the iRS can understand it.  I do not use Turbotax businss, however I don't think it has bsis comps like Intuit's profssional software. 

4 Replies
Level 15
Sep 4, 2023 9:22:01 AM

I'll page @Rick19744 and @Mike9241 

Level 15
Sep 4, 2023 9:40:08 AM

@f404 the current 7203 is undated so I would just use that and write in 2020 in upper right.  for 2020 there is nothing specifying the format of the basis comp as long as the iRS can understand it.  I do not use Turbotax businss, however I don't think it has bsis comps like Intuit's profssional software. 

Level 3
Sep 4, 2023 11:21:31 AM

@Mike9241ok great, on my form 7203 I wrote in black pen in the upper right corner the year 2020 and will include with my mailed-in filing.

Level 13
Sep 4, 2023 11:24:32 AM

It would be good to understand a couple of items:

  • It is the responsibility of a shareholder to maintain a basis schedule of their investment in the S corporation.  This is key as it determines the allowable loss (if applicable), tax impact of distributions and overall gain or loss upon disposition.
  • So the first question, have you been maintaining a basis schedule?
  • If the answer is "yes", then just use what you have been maintaining; assuming it is clear if reviewed by the IRS.
  • If the answer is "no", then you clearly need to do so, and then just attach what you have prepared.
  • Is TT computing your return correctly based on the response to the basis schedule question(s)?
  • Since you are paper filing your tax return, just manually check the appropriate box if you can't figure out how to do so in the software.
  • Since you are paper filing a late return, make sure you send it certified mail return receipt requested.  The taxpayer has the initial burden of proof for filing and the recommended mailing is inexpensive insurance.