S Corporations: How to Calculate Shareholder Basis

Overview

A detailed analysis of the calculations related to determining an S shareholder’s tax basis for S corporation shares and loans. Learn how to use the Form 1120S, Schedule K-1 information for basis determination. An illustrative example demonstrates how the process works, as well as the many potential pitfalls.

Highlights

• Analyzes the calculation of basis when the entity is formed including the impact of contributed property
• Determine the importance of shareholder loans to the entity
• Uses a comprehensive example to illustrate the mechanics of the basis determination process
• Calculate how basis is impacted by distributions of corporation property
• Identify how basis is impacted by sale/or liquidation of the S corporation interest
• Determine how to get from the Schedule K-1 information to the basis calculations

Prerequisites

Basic working knowledge of S corporation taxation.

Designed For

CPAs working in public accounting firms and/or working for S corporations.

Objectives

• Distinguish the tax issues related to S corporation owner's basis for shares and loans from formation through operations
• Determine strategies of a sale and/or liquidation
• Analyze how S corporation losses impact Form 1040 Schedule E-reporting

Preparation

None