1120-US: Electing to have the shareholder basis reduced by deductible items and then non-deductible items (FAQ)

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Question

How do I elect to have the shareholder basis reduced by deductible items first, and then non-deductible items?

Answer

Under IRC Regulation 1.1367-1(g), the shareholder may elect to reduce basis by items of loss or deduction before reducing basis by nondeductible, noncapital expenses and certain oil and gas depletion deductions. To make this election, enter X in the Regulation 1.1367-1(g) election field in the Suspended Losses tab in View > Shareholder Information > Other Info tab > Shareholder Basis dialog. The election statement will automatically print in the respective shareholder package.

The election statement is only required in the first year the election is made. If you do not need the election statement to print in the current year, enter X in the Suppress 1367 election statement field in the Suspended Losses tab.

Related topic: 1120-US: Shareholder basis calculations FAQs

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