Basis: S Corp Shareholders Form 7203 and Partnership Basis

Author: Jane Ryder

Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2027 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card

This course reviews accurate reporting, correcting, and reconstructing for partner and S corp shareholder basis. Including two very common matters affecting S corp shareholder and partner basis related to how business ERTC refunds and PPP loans were reported on the entity tax returns. These entity reporting errors cause basis to be understated, often by substantial amounts. Review these and other critical basis miscalculations and help business and individual tax preparers identify clients with these issues and how to fix them. See how incoming or exiting shareholders, partners and LLC members' accounts are handled plus basis issues when an entity closes or distributes assets.

Publication Date: June 2024

Designed For
Individual and business tax practitioners both need to understand basis.

Topics Covered

• New Form 7203, S Corporation Shareholder Stock & Debt Basis Limits
• Form 7203, Part 1, Shareholder Stock Basis
• S Corp Basis May Need Adjustments for COVID Benefits
• ERTC Credits Caused a Basis Problem
• PPP Loans Which Were Ultimately Forgiven and Any Other Tax-Free Grants
• Stock Block
• Preparing & Filing Multiple Form 7203s
• Allocating Pass-through Items; Income, Losses, Deductions & Nondeductible Expenses to Stock Basis
• Instructions for Form 7203
• Form 7203, Part II, Shareholder Debt Basis Section A, Amount of Debt
• 1120-S Business Tax Return Preparer Caution
• Compliance Matters Related to Shareholder Debt & Taxable Repayments
• Part III. Shareholder Allowable Loss and Deduction Items
• Possible Compliance Exporsure from Form 7203
• S Corp Basis Limitations
• Initial Basis of an Investment in an S Corp
• Reconstructuring Basis for S Corporation Shareholders

Learning Objectives

• Identify basis basics for shareholders, partners, & LLC members
• Identify specific business transactions which may cause basis problems
• Identify best practices for correcting or reconstructing basis if needed
• Recognize how to handle basis calculations for asset contributions or distributions
• Determine tax practitioners' exposure and responsibilities related to basis

Level
Basic

Instructional Method
Self-Study

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None