Please explain "Stock Block" on Form 7203.

[dkroc]

I have read all of the instructions for Form 7203, but cannot find anything that explains what I am supposed to fill in the "stock block" section at the beginning of Form 7203.

[ErnieS0]

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.

Instructions for Form 7203

[Rlc54326666]

So what do you put in there if you only 100 shares, since day 1?

[AliciaP1]

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

[Rlc54326666]

Thank you!!!!

[1stenger]

What if you have had your stock over 10 years and you did NOT purchase any new stock?

[1stenger]

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?

[Idaho9]

Do I still need to enter a stock block number if all my shares were purchased when the business started back in 2003?

[AliciaP1]

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.

@1stenger

@Idaho9

[1stenger]

So then the stock basis at the beginning of the year is 1 or zero. Zero since I did not acquire more stock?

[PatriciaV]

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.

[1stenger]

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?

[DaveF1006]

Since your beginning shares of stock that were awarded are your beginning basis, you will treat this as Stock Block 0.  

@1stenger

[Idaho9]

@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.

[DaveF1006]

Remember you do not need to file this every year. You will file if during the tax year if you:

• 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 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.

@Idaho9