S Corporation Shareholder - Basis in Stock and Debt Worksheet

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This tax worksheet calculates an S Corporation shareholder’s basis in stock and debt for transactions that occur during the year.

Footnotes

  1. See IRC Secs. 49(b), 50(a), 50(c)(2), and 1371(c) - basis restoration due to credit recapture.
  2. Prior years' loss carryover might include different types of loss or deduction, such as both a nonseparately stated loss and a charitable contribution deduction. The practitioner can enter the total carryover loss on this line and attach a schedule tracking the various loss and deduction items.
  3. Under Reg. 1.1367-1(e), basis is reduced by nondeductible items before it is decreased by items of loss or deduction. However, the shareholder may elect to reduce basis by items of loss or deduction before nondeductible items. If the aggregate loss and nondeductible items exceed the shareholder's basis, the shareholder will normally want to make this election.
  4. See IRC Sec. 50(c)(1) and (c)(5) - basis reduction for amount of credit claimed.
  5. Loss and deduction items first reduce stock basis to zero, then reduce debt basis. On line 11, enter the amount from Part I, line 2 in the stock basis column, but do not enter an amount that exceeds line 10 in the stock basis column. Enter the excess (i.e., the amount not entered in the stock basis column) in the debt basis column, but do not enter an amount that exceeds line 10 in the debt basis column. Losses in excess of those applied against stock and debt basis carry over to the following year.
  6. If the shareholder disposes of all of his shares, enter on line 13 the amount shown on line 12 in the stock basis column. This amount entered on line 13 is the shareholder's stock basis for calculating gain or loss on the stock disposition. If a portion of the shareholder's stock is disposed of, enter the stock basis related to the shares sold [after considering the current year's adjustments (e.g., income, expense, and distribution items)].
  7. Combine Part I, line 2 as a negative number and line 10 (both columns) as positive numbers. If the result is negative, enter on line 15. If the result is positive, there is no loss carryover.
  8. The positive amount (net increase) from Part I, line 4, is allocated first to restore debt basis (on line 18) up to the face amount of the loan or, if less, the balance of the loan at the beginning of the tax year. Any excess over the debt basis adjustment is entered on line 18 in the stock basis column.
  9. If the shareholder disposes of all of his shares, enter on line 20 the amount shown on line 19 in the stock basis column. This amount entered on line 20 is the shareholder's stock basis for calculating gain or loss on the stock disposition. If a portion of the shareholder's stock is disposed of, enter the stock basis related to the shares sold [after considering the current year's adjustments (e.g., income, expense, and distribution items)].
  10. Loss and deduction items first reduce stock basis to zero, then reduce debt basis. On line 28, enter the amount from Part I, line 2 in the stock basis column, but do not enter an amount that exceeds line 27 in the stock basis column. Enter the excess (i.e., the amount not entered in the stock basis column) in the debt basis column, but do not enter an amount that exceeds line 27 in the debt basis column. Losses in excess of those applied against stock and debt basis carry over to the following year.
  11. If the shareholder disposes of all of his shares, enter on line 30 the amount shown on line 29 in the stock basis column. This is the shareholder's stock basis for calculating gain or loss on the stock disposition. If a portion of the shareholder's stock is disposed of, enter the stock basis related to the shares sold [after considering the current year's adjustments; (e.g., income, expense and distribution items)].
  12. Combine Part I, line 2 as a negative number and line 27 (both columns) as positive numbers. If the result is negative, enter on line 32. If the result is positive, there is no loss carryover.

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