The 7203 handling has a bug

Forum|Forum|2 years ago
February 23, 2024
3 replies
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The 7203 calculation is wrong

TurboTax Online

RobertB4444

Level 15

Can you clarify this question a little bit, please? What is wrong with the 7203 calculation on your return?

@chuwu888

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chuwu888Author

Level 2

The TurboTax has an issue for handling K-1 in form 7203, in following case:

-- K-1 (from S-Corp) reports a loss in Box-1 ($3,000 for example).

-- The allowable loss ($2,000 for example) from "Stock Basis" is smaller than the loss reported in K-1 Box-1.

The Turbo Tax calculates correctly. However, the software asks user to manually enter the "Deduction Amount" (up-to the allowable loss from the "Stock Basis"), after all data (for 7203) have been entered. Once user changes the deduction amount to the allowable loss (i.e., $2,000 in my pseudo-example), TurboTax would change the K-1 Box-1 amount to the deduction amount (one can view K-1 form on Form View). If I don't modify the deduction amount manually, however, the software would take the entire loss (i.e., $3,000 in my pseudo-example) as the deduction amount.

RobertB4444

Level 15

The amount in box 1 of your K-1 should represent regular income loss. If you have a stock sale loss that should be reported in the box related to long or short term capital gains and the stock basis should have no effect on the box 1 amount. You need to be using the schedule D and form 8949 for whichever corporate tax form you are filing.

@chuwu888

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