S Corp Basis 7203: NEW IRS Form 7203 [S Corporation] Shareholder Stock & Debt Basis Limit Form 1040

S Corp Basis Form 7203: Not with Schedule K-1 Form 1120-S. Not an S Corp Tax Form, but filed with Form 1040. S Corporation Shareholder Stock and Debt Basis Limitations Reported with Form 1040. S corporation shareholders use Form 7203 to figure the potential limitations of their share of the S corporation’s deductions, credits, and other items that can be deducted on their individual returns. Basis Disclosures This Year for S corporation Shareholders. Need to Complete New Form 7203 (to be Attached to 1040 Return). Many S Corp owners must include S corporation stock basis information with their 1040s. SEE BELOW FOR: Who has to file Form 7203?

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IRS Form 7203: S Corporation Shareholder Stock and Debt Basis Limitations

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Who has to include Form 7203?
This requirement applies to S Corporation shareholders that do any of the following: Claims a deduction for a loss, Disposes of their stock, Receives a distribution, Receives a loan repayment from the company during the year. The requirement to maintain tax basis (and to disclose tax basis on Form 1040) is ultimately the responsibility of the S corporation shareholder.

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[Dave-]

JJ, if for 2022 your S-corp has a normal operating loss and that loss is disallowed due to no stock or debt basis and you have negative retained earnings and no distributions of any kind, then does the 100% S-corp shareholder need to complete IRS Form 7203 with their individual 1040? My tax software is telling me it wouldn't be required under these circumstances and so I'm looking for a second opinion on that. Thanks for your valuable time and for hosting such a wonderful and valuable channel.

[ShibaSoftware]

Let me see if I am understanding. You loan your Scorp $1000. The Scorp purchases the captain america shield for $500. Your basis remains $1k? You then take a $250 distribution. Your basis is now $750. When it
comes time to file your 1040, you also need to track your basis.

[Dave-]

JJ, what should you do and how do you complete IRS Form 7203 if you have negative Retained Earnings of $ 70, 000+ and it's all from cumulative operating losses over a number of years and none of it was distributions to shareholder and there is only 1 S-corp shareholder? If those losses were written off as they occurred and not suspended does that mean that $ 70, 000+ now needs to be recognized as a long-term capital gain or something? If so, how does that work?

[CryptoQueen]

JJ, I am 100% shareholder of my s corp and approved to be backdated to tax year 2021. Would my starting basis for 2021 be what was in the business account in Dec 31st of 2020?

[jenniferabell]

In the year that an LLC disregarded entity elects to be taxed as an S-Corp, how is the shareholder basis reported on Form 7203 relating to the existing basis?

[dorigaminapkins]

Aloha JJ, This is my 1st time seeing the 7203 also. My situation is similar to Dave the gentleman in your comments below mine that asked a similar question. I'm using turbotax and 7203 came up. I am 100% Shareholder my s-corp since 92 was relatively successful many years in advertising and promoting, Y et a few years ago, I d launch on a couple projects. I still have a utility patent that I'm going to refocus on with the manufacturing that I had before 2020 and covid shut Downs stopped things again.. Anyway I have about 62000 Accumulated shareholder equity from loans to the s-corp from me to cover basic operations some production And some labor cost, design artists etc
0 income only expenses the last few years... Do I need to file

[williamthomas-qlis]

I started the year with no shareholder equity and a loss from the previous year should i take a distributions? if so how will it be taxed?

[donttread]

Is 7203 required starting years tax years 2022 or 2021?