INCREASE TO S CORPORATION BASIS

Technical topics regarding tax preparation.
#1
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my client has forgiven PPP loan and also EIDL Advances that do not require repayment. Her S corporation basis is increased.

The question is: Does a Working Washington Grant that is non taxable for federal purposes, does not have to be repaid, qualify for purposes of increasing her basis in the s corporation.
 

#2
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Are you sure this is nontaxable for federal purposes?
~Captcook
 

#3
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All income, taxable or non taxable generally increases basis
 

#4
Nilodop  
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Please tell us more about the WW Grant. Ypu say it does not hae to be repaid. Is that regardless of what they use it for? Can they just distribute it to themselves? Must they spend it in a particular way or by a certain time? If they don't do so, what happens?
 

#5
Nilodop  
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It surprises me when a member posts what appears to be a real question and the does not check back for answers.

Are you sure this is nontaxable for federal purposes?. Likely under section 118.

All income, taxable or non taxable generally increases basis. Not if 118 applies.

So they'd have a grant followed by non-deductible expenses, or followed by a capital expenditure with a reduced basis.

Compare Notice 2003-18. https://www.taxnotes.com/research/feder ... sses/1fvm0
 

#6
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[quote="Nilodop"]It surprises me when a member posts what appears to be a real question and the does not check back for answers.

All income, taxable or non taxable generally increases basis. Not if 118 applies.

I said generally :lol:
 

#7
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Section 118 went obsolete (for the most part) with the TCJA
 

#8
Nilodop  
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So it's taxable and increases basis.
 

#9
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Sounds about right
 

#10
Joan TB  
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Is OP sure that the grants are non-taxable to federal? My brief research did not find that, only that it is exempt from certain State of Washington taxes.
 

#11
Nilodop  
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It still surprises me when a member posts what appears to be a real question and the does not check back for answers.
 


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