Help with Form 7203 S Corp Shareholder Stock and Debt Basis Limitations

[lisandavis50]

My k-1 has values in Box 17AA (excess taxable income) and Box 17AC (Gross receipts of section 448 (c). Do those numbers affect shareholder basis (maybe on lines3(i) or 3(m)?

[Togwotee]

@AliciaP1 

Thank you for all of your posts in explaining Form 7203.  I was hoping to ask about my situation.  I will use hypothetical numbers for a return that I have already submitted.

I have a K-1 with let's say 2M in nonpassive losses.  My allowable loss from stock basis line 47c(form 7203) is 750k with a carryover of 1.25M to future years.  I don't think the basis limit is showing up anywhere on schedule E, schedule 1, or 1040 as TurboTax seems to be reporting the entire 2M in losses.  Do I need to adjust it manually in TurboTax, as form 7203 doesn't seem to effect the numbers elsewhere in the return?  If, so, how?

With my current filed return, if I had wages of 1M, it shows an AGI is 0 instead of 250k.

My losses do pass the at-risk and passive activity limit.  I also just found out about the excess business loss limit with form 461, which does not appear to be supported by TurboTax.  TurboTax unfortunately didn't ask a relevant question in the interview or alert me to a problem.  Since I am MFJ, my threshold limit 524K.  As far as I know the only fix for this would be to print out a Form 461 with an amended return and manually make an entry on line 8o on schedule 1, and then mail it in.   This would reduce my AGI to 476K and would then also give me an NOL of 226K to manually track (TurboTax doesn't seem to track this without form 461) in addition to the carryover of 1.25M from the basis limitation. 

Any insights or help would be greatly appreciated. 

[That Guy1]

Check box on 1120s information worksheet to calculate basis. 

[markmartian]

The instructions for lines 35 - 46 are confusing.  Turbotax form 7203 (forms view) says to "enter only negative values (loss) on lines 35-46".  Those are the lines where you enter losses, so you'd think they would be negative numbers.  But in fact, you should enter your loss as a POSITIVE number, not a negative number.   This confusing language tripped me up and yielded wrong results until I figured it out.  The way the form is written, you shouldn't enter a negative number in any field in the whole form, only positive numbers...even for losses.

[IHaveABigQuestion]

Not sure if I posted this already but I found this and thought it was valuable information for anyone who needs it. If you use Turbo Tax Business for your business returns it basically completes From 7203 for you.  Go to forms, 1120S, Information WKS, scroll down to k-1 and check box for Yes, calculate stock basis limitations worksheet, this is where it basically does Form 7203 for you other than your starting basis.

[yarmo81]

IHaveABigQuestion, I don't know why this wasn't emphasized by the Experts, but this is a really helpful point you made!  I wanted to be sure and thank you for the help.  Assuming you're correct, and if over the years my basis has been figured correctly, using the data from this worksheet will save me much time.  Maybe it'll save time for others, too.  It is disappointing that TurboTax Deluxe (TTD) is so poor with this 7203 form.  TTD should have emphasized "Turbo Tax Business for your business returns it basically completes From 7203 for you. Go to forms, 1120S, Information WKS, scroll down to k-1 and check box for Yes, calculate stock basis limitations worksheet, this is where it basically does Form 7203 for you other than your starting basis.",too. Only those who couldn't get that info. from TT Business or another source should then have had more effort.  Even then it should have led to a good tutorial.  Really, TTD should allow us to upload our TTB file so it can then put in all the correct info for this form and even the K-1s!  Competitors charge one fee for both business and personal, so if we're going to pay twice here, it should be = or better in every important way....