If you acquired your S-Corporation shares at different times or at different prices, you will have more than on stock block. Identify each separate block of stock.
Stock block. When a shareholder has a different basis in different blocks of stock, pass-through items are generally allocated pro rata to all shares, regardless of their different bases. If there is a partial stock sale or partial redemption, you may file more than one form and provide a description of what period the form covers. See Regulations section 1.1367-1(b)(2) and (c)(3) for details.
So what do you put in there if you only 100 shares, since day 1?
You will enter "1" for the stock block if you have only purchased 1 block of stocks. A stock block refers to the group of stocks you purchase each time. For instance, if you purchase 100 shares on day 1 then purchase 100 more on day 200, you have 2 stock blocks.
@Rlc54326666
What if you have had your stock over 10 years and you did NOT purchase any new stock?
What if you have the same number of stocks as when the S-Corp started, 10 years ago, and have NOT purchased any stock since then?
Do I still need to enter a stock block number if all my shares were purchased when the business started back in 2003?
Yes, if you have only invested in or purchased stock 1 time, then your stock block is the first block and should be identified as Stock Block #1. The only reason you would have more than one stock block, is if you had another transaction which resulted in you having more stock. If you had 2 more transactions that gained you more stock then you would have 3 stock blocks in total.
Since you are reporting you only gained stock from the initial purchase or investment, then your stock block is #1.
So then the stock basis at the beginning of the year is 1 or zero. Zero since I did not acquire more stock?
Yes, your basis at the beginning of year one would be zero. You don't have basis until you purchase stock. Just to be clear, basis is in dollars, not in shares.
ok, I have not purchased any stock since given the shares in the partnership 15+ years ago. I did not purchase any since then, so is my stock block 1 or zero?
Since your beginning shares of stock that were awarded are your beginning basis, you will treat this as Stock Block 0.
@AliciaP1 So in future years do we continue to mark block 1 or would it revert to block 0 since we already are recording on block 1 this year? Would my husband's also be considered stock block 1? We are joint partners in the S-Corp.
Remember you do not need to file this every year. You will file if during the tax year if you:
If you need to file in future tax years and if you haven't purchased any shares of stock, then this would be a Stock Block 0.
As far as your husband's reporting requirements, if you received a K1 issued in both your names or the name of your business, you would report Stock Block 1 as one total since you are reporting one 7203 issued in both your names or your business name. you would not create separate 7203's.
Sorry, I'm still a bit confused. I started S Corp 9 years back with initial shares. (didn't have any purchase(s) )
What do I put in stock block a "1" or a "0"
Thanks
The Stock Block line is a description for your use, so if you have more than one Form 7203, you can identify the stock that is reported on each copy. Most shareholders have one block of stock that represents the initial investment. You can call this Stock Block "Initial Investment" or "Stock Block 1" or whatever is useful to you.
But if you purchased additional shares on a later date, or sold some of your initial investment, you may need to use a specific description on this line.
Hi,
I began investing in my company (s-corp) over 10 years ago, and I've purchased blocks of stock at various times at various amounts, but none were purchased last year (2021). Do I need to somehow report each block of stock going back to beginning? This would be a nightmare...
Thanks.
Unless you sold a block of stock this year, you may combine stock purchases in whatever format you need, as long as you can track the basis for those purchases. Pass-through items (Schedule K-1) are generally allocated pro-rata to all shares, regardless of their different bases.
However, each sale must be allocated to the basis for that particular block of stock. If you sell a block of stock, you would need to file at least two Forms 7203 - one for the sale and one for the remaining shares.
Related question on this Stock Block. I am the only stock holder (100% from the beginning) for my S corp which I dissolved and just filed my final return, so it is making me do this 7203. What do I put in the Stock Block? 1 or 0?
The Stock block on Form 7203 is to identify your shares so you can keep track. You use either number or a description such as 100 shares of ABC Corp @PatrickPNelson.
Thank you!! Simple answer to a rather complex question thanks to the IRS on this new form this year.
We originally had a C Corporation that 20 years ago was converted to an S corporation. I have the cost basis for the C Corp when the conversion took place. Do I use the stock block to increase my stock basis in the S corporation that has been liquidated? Thanks for your help
At the time of conversion, the stock basis in the C-Corp becomes your beginning stock basis in the S-Corp and it was then just 1 stock block. You then need to create a basis calculation for each of the 20 years the S-Corp operated. When you get to the balance on 12/31/2020, this amount becomes your beginning stock basis for 2021. Only 2021 activities will then increase or decrease your basis prior to the liquidation.
You can use S Corporation Stock and Debt Basis for help on calculating your basis.