Form 7203 Impossible to Fill Out

Forum|Forum|4 years ago
April 12, 2022
9 replies
113 views

My father and I started our little S Corp 20 years ago. We didn't "purchase" stock. We are just 50/50 owners with no initial cash input. We never kept a stock basis worksheet (shame on us, I guess). I have no idea how I'm supposed to fill out the new Form 7203. I don't even have K1s from that long ago. Any suggestions? Can I still submit my taxes without filling it out completely? I no longer get an error, as long as I put a Stock Block of 1. But that's all I entered. Ugh!!! By the way, my father uses HR Block and the form doesn't even exist in the desktop version so he was able to e-file with no issues.

Not A Product Question

Boots00001

Level 2

See the following for guidance:

The stock basis in the S corporations should have been known for every tax return filed.

Form 7203 is filed by S corporation shareholders who:

Are claiming a deduction for their share of an aggregate loss from an S corporation (including an aggregate loss not allowed last year because of basis limitations),
Received a non-dividend distribution from an S corporation,
Disposed of stock in an S corporation (whether or not gain is recognized), or
Received a loan repayment from an S corporation.

If one of these requirements applies, then Form 7203 is required.

Basis is handled as follows:

Basis is increased by (a) all income (including tax-exempt income) reported on Schedule K-1 (Form 1120-S), and (b) the excess of the deduction for depletion (other than oil and gas depletion) over the basis of the property subject to depletion.
Basis is decreased (but not below zero) by (a) property distributions (including cash) made by the corporation reported on Schedule K-1 (Form 1120-S), box 16, code D, minus (b) the amount of such distributions in excess of the basis in your stock.
Basis is decreased (but not below zero) by (a) nondeductible expenses, and (b) the depletion deduction for any oil and gas property held by the corporation, but only to the extent your share of the property's adjusted basis exceeds that deduction.
Basis is decreased (but not below zero) by all losses and deductions reported on Schedule K-1 (Form 1120-S).

If Form 7203 is needed then your best efforts to calculate the stock basis is needed. Previous tax returns should contain the information needed.

supergrover91Author

Level 2

Unfortunately, the stock basis was not known on each tax return so I'm kind of screwed now. This is so beyond the knowledge of a small business owner using TurboTax to do their personal taxes. Lesson learned, I suppose.

Boots00001

Level 2

Yes that is difficult. The best you could do is estimate the basis. Totally adjusted based on the yearly profit over the years. You could also try a zero basis to see the impact. A bit of trial and error to see the impact, and also a credible effort to meet the requirements.