New (tax) year, new help!

Fixed Assets and UltraTax CS 2023 help is now on Help and Support. We're still moving articles, but you can find most content for the 2023 tax year there. Continue using the Help & How-To Center for tax years 2022 and older.

Question

Will UltraTax CS/1120 carryover the disallowed portion of nondeductible, noncapitalized expenses when the election under Regulation 1.1367-1(g) is not made?

Answer

No. Based on the Form 1120-S Schedule K-1 instructions, the shareholder's basis is decreased (but not below zero) by nondeductible expenses and the depletion deduction for any oil and gas property held by the corporation. Any remaining amount of the shareholder's basis is then decreased (but not below zero) by all losses and deductions reported on Schedule K-1.

Under Regulation 1.1367-1(g), the shareholder may elect  to decrease the basis by all losses and deductions prior to decreasing the basis by all nondeductible expenses. If this election is made, the disallowed portion of nondeductible, noncapitalized expenses will carryover to the following year. If the election is not made, the disallowed portion will not carryover to the following year.

Was this article helpful?

Yes No

Submit