Surgent's Guide to Calculating S Corporation Shareholder Stock and Loan Basis

Overview

This program discusses, in a practical way, how an S corporation shareholder calculates their stock and loan basis on Form 7203. Form 7203 is the IRS Form on which a shareholder is sometimes required to calculate their stock and loan basis. This topic is particularly important when an S corporation has a loss and the shareholders wish to know whether they are entitled to fully utilize the loss that has been allocated to them against their other income.

Prerequisites

Basic understanding of tax rules relating to S corporations and S corporation shareholders

Objectives

• Calculate an S corporation shareholder's basis in his or her S corporation shares on Form 7203
• Understand and apply the S corporation shareholder loan basis rules

Highlights

• Introduction to Form 7203
• Introduction to the calculation of stock basis
• Introduction to the calculation of loan basis
• Taxable and nontaxable S corporation distributions to shareholders
• The election to reduce basis by deductible losses and expenses before reducing basis by nondeductible expenses