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S Corp Basis, Distributions, and Form 7203: Calculating Stock and Debt Basis, Losses, Loan Repayments

Recording of a 90-minute premium CLE/CPE video webinar with Q&A

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Conducted on Tuesday, February 13, 2024

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This CLE/CPE webinar will provide tax professionals guidance for reporting S corporation basis calculations on Form 7203 and stock and debt basis limitations. The panel will discuss methods for the reconstruction of beginning basis and best practices for tracking shareholders' basis. The panel will also discuss challenges for reporting loan repayments, stock blocks, and utilization of suspended losses.

Description

Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations, formalized the requirement for shareholders to include a basis schedule for specific situations with their tax returns. Whether or not the form must be filed depends on certain criteria as provided in the form instructions. Tax professionals must understand all items required under Form 7203 and key issues in tracking and calculating basis to avoid reconstructing basis in the future.

When a shareholder receives a K-1 reflecting a loss or a distribution, or if there is a change in ownership, the shareholder must determine their adjusted basis to determine the tax effects. Shareholders bear the burden of basis tracking with any missteps potentially resulting in adverse tax consequences.

The form includes three sections: Part I Shareholder Stock Basis, Part II Shareholder Debt Basis, and Part III Shareholder Allowable Loss and Deduction Items. Tax advisers must understand how to report shareholders' basis, the pertinent regulations governing these calculations, and potential conflicts between the form instructions and these regulations.

Listen as our panel discusses methods for the reconstruction of beginning basis and best practices for tracking shareholders' basis. The panel will also discuss challenges for reporting loan repayments, stock blocks, and utilization of suspended losses.

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Outline

  1. S Corp basis and filing requirements
  2. Form 7203
    1. Part I – Stock Basis
    2. Part II – Debt Basis
    3. Part III - Shareholder Allowable Loss and Deduction Items
  3. Calculations and examples
  4. Reconstructing basis
  5. Best practices and pitfalls to avoid

Benefits

The panel will cover these and other key issues:

  • What are the key challenges in calculating stock and debt basis?
  • Navigating Form 7203 and pitfalls to avoid
  • Treatment of loan repayments as ordinary vs. capital income
  • Reporting the utilization of prior year losses on Form 7203
  • Using stock blocks to minimize shareholders' tax

Faculty

Barnett, Robert
Robert S. Barnett, JD, MS (Taxation), CPA
Partner
Capell Barnett Matalon & Schoenfeld

Mr. Barnett’s practice is highly concentrated in the areas of taxation, trusts, estates, corporate and...  |  Read More

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Strafford will process CLE credit for one person on each recording. CPE credit is not available on recordings. All formats include course handouts.

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