Please explain "Stock Block" on Form 7203.

[Taxquestioner179]

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

[PatriciaV]

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.

[EDLIHKIRE]

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.

[PatriciaV]

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.

[PatrickPNelson]

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?

[ErnieS0]

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.

[MJSarros]

Thank you!!  Simple answer to a rather complex question thanks to the IRS on this new form this year.

[Lavash1]

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

[AliciaP1]

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.

@Lavash1

[Lavash1]

Thank you very much for your help.

[IHaveABigQuestion]

So if you only have the initial stock from starting the SCorp and never buy or sell any stock you would continue to put "Initial Investment 1" in the Stock Block field each and every year on Form 7203?

[PatriciaV]

Yes. You will continue to use the same description in the Stock Block field for your initial stock every year that you report your investment. 

Note that this designation is for your use to track your basis in the stock, which will be quite useful when you eventually sell your investment.