New Form 7203 - Shareholder Basis

Technical topics regarding tax preparation.
#1
FLAcct  
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On line 2 of this form you are to put "Basis from any capital contributions made or additional stock acquired during the tax year". My question is about the additional stock. Would this only be additional stock acquired from the corporation? What if one shareholder buys stock from another shareholder. Does this amount go here? I don't see how the corporation would know when this happens. Is the shareholder who bought the stock from the other shareholder supposed to keep track of this basis separately? Thanks for your help.
 

#2
sjrcpa  
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Amounts from all stock acquisitions count for basis.
Yes the corporation would not necessarily know how much one shareholder paid another shareholder for their stock.
It is the shareholder's responsibility to keep track of their basis; not the corporation's.
 

#3
jon  
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That is the point - there is matching "MAYBE" for the basis to the business' balance sheet, but there is NO MATCHING required to the basis on the taxpayer's return????
 

#4
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A situation where an S corp liquidated in 2021 after 30 years. If it had made an error somewhere way back in time on shareholder stock basis in some close year, and there was never any shareholder debt.

Shareholders maintained their own accurate basis schedules.

Why would the IRS care if 7203 beginning stock basis was correct as long as each shareholder's return used the correct basis to calculate their gain or loss in the final year?
 

#5
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FLAcct wrote:On line 2 of this form you are to put "Basis from any capital contributions made or additional stock acquired during the tax year". My question is about the additional stock. Would this only be additional stock acquired from the corporation? What if one shareholder buys stock from another shareholder. Does this amount go here? I don't see how the corporation would know when this happens. Is the shareholder who bought the stock from the other shareholder supposed to keep track of this basis separately? Thanks for your help.


The corporation does not file a Form 7203, the shareholder does.
 

#6
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Duh, i took an entire cpe webcast on the form and missed that crucial piece.

So still no requirement that the S corp provide tax basis information the way partnerships are required to provide tax basis capital account info?

Since an S corp won't know cost info for many shareholder transactions that affect share basis, seems that it's better for S corp not to voluntarily file a plain paper statement with a basis calculation?
 

#7
JAD  
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lenraphael wrote:So still no requirement that the S corp provide tax basis information the way partnerships are required to provide tax basis capital account info?


Correct. I wonder why the difference.
 


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