Form 7203, Line 6 is blank but K-1 has value in Box 16 Code D for distributions

[dlozier]

While reviewing my 2025 taxes, I noticed my stock basis on Form 7203 is growing. Looking more closely, I see that line 6 is blank for 2025 and was also blank on my filed 2024 return. My K-1s have a $230k distribution (Code D) for 2025 and $96.234 in 2024. If I am reading the IRS instructions correctly, line 6 on the 7203 should equal K-1, Box 16-D. In both years, line 5 on Form 7203 is well above these numbers, as I am not taking out more than the company made. I can manually enter line 6, but it doesn't seem appropriate to do that, and I could easily forget to do it next year.  Is there a reason this is happening, and can I correct 2024 without filing an amendment?

Thanks for your help!

[CesarJ]

No, don't change your Form 7203 if the S-corporation return has already been filed. This basis recomputation must be done at the S-corporation level. You can recompute the changes in 2026, and those changes will be reflected in your 2026 Form 7203.

[dlozier]

Neither the S-Corp nor my individual return has been filed for 2025. I don't understand what needs to be done at the S-Corp. Is the K-1 supposed to report a distribution differently than in box 16 using code D?

[PatriciaV]

No, Box 16 Code D is appropriate for S-Corp distributions. However, if your Form 7203 doesn't match the accumulated K-1s, you need to identify the source of the difference. Then the S-Corp may revise the business return and/or your K-1.

Note that the deadline to file 2025 S-Corp returns is March 15, 2026. If you need help meeting that deadline, you may consider upgrading to TurboTax Experts. This online service provides step-by-step guidance from a tax expert whenever you need assistance, either over the phone or by screensharing. The savings of time and effort may be worth the extra cost.

[dlozier]

Thanks for the responses. I'm trying to better understand this. Reading the instructions for Form 7203, it appears that the numbers from K-1 Line 16D should carry over to line 6 of Form 7203. Is that a true statement, and if so, why did TurboTax not do that in 2024, and why is it not doing that while I am preparing the 2025 return? 

Thanks,

Don

[PatriciaV]

You are correct. Distributions from Schedule K- 1 Line 16 Code D should flow to Form 7203 Line 6 as a reduction in basis.

We would like to research this experience further. It would be helpful to have a TurboTax ".tax2025" file to test this issue.

If you would be willing to send us a “diagnostic” file that has your “numbers” but not your personal information, please follow these instructions: 

In TurboTax Desktop, open your return and go to Online in the TurboTax header. (On a Mac computer, choose Share or Help.)

1. Choose Send Tax File to Agent.
2. You will see a message explaining what the diagnostic copy is.  Click Send on this screen and wait for the Token number to appear.
3. Reply to this thread with a screenshot of your Token number (this avoids Community filters for numbers with a dash) and tag (@) the Expert requesting the token from you.
4. Please include any States that are part of your return - this is VERY important.

We will then be able to see the same experience you are having. If we are able to determine the cause, we'll reply here and possibly provide you with a resolution. 

[dlozier]

@PatriciaV 

Thank you for the reply. Here is the 2025 Token number. This file is not completed as I still have investment information to enter, but I assume that should not affect the K1 or 7203. I also included the final 2024 as it did not work last year either. Please let me know what you find out. Thanks for your assistance.

[PatriciaV]

Thank you for the tokens.  We are looking into the issue and will respond as soon as we have information to share.

@dlozier 

[PatriciaV]

If you return to the step-by-step interview for your K-1, TurboTax will present a sub-form for Form 7203 with instructions to manually enter your distributions on Line 6. In Forms Mode, a field highlighted in yellow is designated for user input rather than an automatic entry by the software. 

If Form 7203 of your prior year return failed to include distributions for that tax year, you may wish to file an amended return to include that information, especially if the omission affects your basis in the S-Corp. You will also need to adjust your beginning balance on this year's Form 7203 Line 1.

[dlozier]

@PatriciaV 

Thanks for the information. Just so I understand this correctly for 2024, this year, and future years, are you saying that I need to enter this  field manually, because Turbax does not automatically pull this information from the K-1 and fill in line 6 of Form 7203?

[PatriciaV]

Yes, Form 7203 is completed manually by the taxpayer each year. Be sure to keep a copy of the form for next year.