Basis in an S Corporation is a critical factor to consider, as it directly affects the tax treatment of distributions and the deductibility of corporate losses on personal tax returns. To make these declarations, shareholders must use Form 7203 on individual tax returns and must file this form in most situations to report their basis in the corporation.

At its most basic level, basis is simple enough to calculate, but one can quickly get into the weeds. This course takes a straightforward approach to explain basis, how it is calculated, and how to properly fill out Form 7203.

Learning Objectives:

• Define S Corporation basis and explain how it differs from partnership basis


• Calculate increases and decreases to basis


• Report with accuracy the taxability and deductibility of shareholder distributions


• Recognize when Form 7203 is required and correctly complete the form when needed


• Summarize how to deal with shareholder loans