Форма 7203 Інструкції
Інструкція по формуванню 7203, S Corporation
2022 р
Пов'язані форми
- Форма 7203 - S Corporation Акціонерні та дебатні ліміти
Department of the Treasury
Internal Revenue Service
Instructions for Form 7203
S Corporation Shareholder Stock and Debt Basis Limitations
(Rev. December 2022)
Section references are to the Internal Revenue Code
unless otherwise noted.
and the excess business loss limitations (Form 461). See
the Shareholder's Instructions for Schedule K-1 (Form
1120-S) for details.
Future Developments
Basis Limitations
For the latest information about developments related to
Form 7203 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Generally, the deduction for your share of aggregate
losses and deductions reported on Schedule K-1 (Form
1120-S) is limited to the basis of your stock and loans
from you to the corporation. For details and exceptions,
see section 1366(d). The basis of your stock is generally
figured at the end of the corporation's tax year. Any losses
and deductions not allowed this year because of the basis
limit can be carried forward indefinitely and deducted in a
later year subject to the basis limit for that year.
What’s New
New items on Form 7203. New item D checkbox(es)
are added for stock acquisition method(s). New item E
checkbox is added to indicate when a Regulations section
1.1367-1(g) election is in effect during the tax year for this
You are responsible for keeping the information
needed to figure the basis of your stock in the corporation.
Schedule K-1 (Form 1120-S) provides information to help
you figure your stock basis at the end of each corporate
tax year. The basis of your stock (generally, its cost) is
adjusted annually as follows and, except as noted, in the
order listed. In addition, basis may be adjusted under
other provisions of the Internal Revenue Code. You
should generally use this form to figure your aggregate
stock and debt basis.
1. Basis is increased by (a) all income (including
tax-exempt income) reported on Schedule K-1 (Form
1120-S), and (b) the excess of the deduction for depletion
(other than oil and gas depletion) over the basis of the
property subject to depletion.
Reminder
Form 7203 and its separate instructions are developed to
replace the 3-part Worksheet for Figuring a Shareholder’s
Stock and Debt Basis and its related instructions formerly
found in the Shareholder's Instructions for Schedule K-1
(Form 1120-S).
General Instructions
Purpose of Form
Use Form 7203 to figure potential limitations of your share
of the S corporation's deductions, credits, and other items
that can be deducted on your return.
You must report on your return (if you are required
Who Must File
to file one) any amount required to be included in
!
Form 7203 is filed by S corporation shareholders who:
CAUTION
gross income for it to increase your basis.
Are claiming a deduction for their share of an aggregate
•
loss from an S corporation (including an aggregate loss
not allowed last year because of basis limitations),
2. Basis is decreased (but not below zero) by (a)
property distributions (including cash) made by the
corporation reported on Schedule K-1 (Form 1120-S),
box 16, code D, minus (b) the amount of such
distributions in excess of the basis in your stock.
3. Basis is decreased (but not below zero) by (a)
nondeductible expenses, and (b) the depletion deduction
for any oil and gas property held by the corporation, but
only to the extent your share of the property's adjusted
basis exceeds that deduction.
Received a non-dividend distribution from an S
•
corporation,
Disposed of stock in an S corporation (whether or not
•
gain is recognized), or
Received a loan repayment from an S corporation.
•
It may be beneficial for shareholders to complete
and retain Form 7203 even for years it is not
TIP
required to be filed, as this will ensure their bases
are consistently maintained year after year.
4. Basis is decreased (but not below zero) by all
losses and deductions reported on Schedule K-1 (Form
1120-S).
Limitations on Losses, Deductions,
and Credits
You may elect to decrease your basis under (4) prior to
decreasing your basis under (3). If you make this election,
any amount described under (3) that exceeds the basis of
your stock and debt owed to you by the corporation is
treated as an amount described under (3) for the following
tax year.
There are potential limitations on corporate losses that
you can deduct on your return. These limitations and the
order in which you must apply them are as follows: the
basis limitations (Form 7203), the at-risk limitations (Form
6198), the passive activity loss limitations (Form 8582),
Oct 19, 2022
Cat. No. 74861H
To make the election, attach a statement to your timely
filed original or amended return that states you agree to
the carryover rule of Regulations section 1.1367-1(g) and
the name of the S corporation to which the rule applies.
Once made, the election applies to the year for which it is
made and all future tax years for that S corporation,
unless the IRS agrees to revoke your election.
Item E
Check the box to indicate if you have a Regulations
section 1.1367-1(g) election in effect during the tax year
for this S corporation. See Regulations section
1.1367-1(g) for details.
Part I. Shareholder Stock Basis
The basis of each share of stock is increased or
decreased (but not below zero) based on its pro rata
share of the above adjustments. If the total decreases in
basis attributable to a share exceed that share's basis, the
excess reduces (but not below zero) the remaining bases
of all other shares of stock in proportion to the remaining
basis of each of those shares.
Part I of Form 7203 addresses adjustments to
stock basis as provided under section 1367.
!
CAUTION
Other code sections might also cause a reduction
in S corporation stock basis.
Line 1. Enter your basis in the stock of the S corporation
at the beginning of the corporation’s tax year. Unless this
is your initial year owning stock in the S corporation, this
amount should be the same as your ending stock basis
from the prior tax year.
Basis of loans. The basis of your loans to the
corporation is generally the balance the corporation owes
you, adjusted for any reductions and restorations of loan
basis. See the instructions for box 16, code E, in the
Shareholder's Instructions for Schedule K-1 (Form
1120-S). Any amounts described in (3) and (4), earlier,
not used to offset amounts in (1), earlier, or to reduce your
stock basis, are used to reduce your loan basis (to the
extent of such basis prior to such reduction).
Stock basis can’t be less than zero.
Don’t include any basis from indebtedness on this line.
Stock basis and debt basis must be figured separately.
Debt basis is addressed in Part II of this form.
Line 2. Enter any additional contributions to the capital of
the S corporation or any additional acquisitions of stock.
Don’t include any loans to the S corporation.
When determining your basis in loans to the
corporation, remember that:
!
The basis of stock you purchased is usually its cost.
CAUTION
If you contributed property to the S corporation in
exchange for stock in a section 351 transaction, your
stock basis is generally figured by taking the carryover
basis of assets transferred to the corporation, less the
liabilities assumed by the corporation. If the assumed
liabilities exceed the adjusted tax basis of the contributed
assets, see section 357(c). See section 358 for more
information on the basis of stock received in a section 351
transaction.
The basis of inherited property is generally the fair
market value (FMV) at the date of death or the alternate
valuation date. See section 1014 and Regulations section
1.1014-4.
Distributions don't reduce loan basis, and
•
•
Loans that a shareholder guarantees or co-signs aren't
part of a shareholder's loan basis. Shareholders only
obtain basis from acting as a guarantor or in a similar
capacity to the extent the shareholder makes a payment
pursuant to the guarantee.
See Regulations section 1.1366-2(a) and section 1367
and its regulations for more details.
Specific Instructions
Name of Shareholder
The basis of stock acquired by gift is generally the
basis of the stock in the hands of the donor. There are
special rules if the FMV of the stock is less than the
donor’s adjusted basis. See Regulations sections
1.1015-1, 1.1366-2(a)(6), and 1.1366-2(a)(7).
Enter the name shown on your Schedule K-1 (Form
1120-S). If you are married filing jointly and you received a
Schedule K-1 (Form 1120-S) for you and your spouse,
complete a separate Form 7203 for each spouse.
The basis for stock received as compensation is the
FMV on the date the compensation is included in income.
See Pub. 551 for details.
Line 3. Enter on lines 3a through 3m all separately
figured and non-separately figured items of income from
Schedule K-1 (Form 1120-S). See below for specific
instructions.
Reminder. Enter only positive amounts from
Schedule K-1 (Form 1120-S) on line 3. Negative amounts
(decreases to stock basis) are entered in Part III.
Item C
When a shareholder has a different basis in different
blocks of stock, pass-through items are generally
allocated pro rata to all shares, regardless of their different
bases. If there is a partial stock sale or partial redemption,
you may file more than one Form 7203 and provide a
description of what period the form covers. See
Regulations section 1.1367-1(b)(2) and (c)(3) for details.
Item D
Check applicable box(es) to indicate how stock was
acquired. If you didn't acquire the stock through purchase,
inheritance, gift, or as an original shareholder, check
“Other” and enter the method by which you acquired your
stock.
Line 3i. Enter the amount of other income that increases
basis.
Under Notice 2020-69, increase stock basis under
section 961(a) when the U.S. shareholder has a subpart F
Instructions for Form 7203 (Rev. 12-2022)
-2-
inclusion (as defined in section 959(a)(2)) or global
intangible low-taxed income (GILTI) inclusion amount (as
defined in section 951A) attributable to an S
Line 13. Enter any other decreases to stock basis not
accounted for on the lines above. This includes the
reduction to basis for the sale or redemption of part of
your stock. If an election is made under Regulations
section 1.1367-1(g), enter the amounts on this line as
instructed on line 8, including any prior year carryover
amounts.
corporation-owned controlled foreign corporation (CFC).
Line 3j. Enter the amount by which your cumulative
depletion deduction exceeds your proportionate share of
basis in the property subject to depletion. See information
reported in Schedule K-1 (Form 1120-S), box 15, using
code C.
If a portion of your stock is redeemed, sold, or
otherwise disposed of during the year, attach two
separate forms. Use the first to figure your stock
TIP
For oil and gas depletion, don’t enter an amount. See
the instructions for line 8b for the decrease to basis.
basis at the date of sale and the second to figure your
stock and debt basis at year end.
Line 3k. Enter the sum of the amounts from
Schedule K-1 (Form 1120-S), box 16, codes A and B.
Part II. Shareholder Debt Basis
Basis isn’t increased by excluded discharge of
If you have more than three loans, use additional
indebtedness income of the S corporation under
!
copies of Part II. List the total sum of all loans on
CAUTION
TIP
sections 108(a) and 108(d)(7)(A).
the first page only.
The income reported on line 3 should be reported on
the appropriate areas of your return. See the
Shareholder's Instructions for Schedule K-1 (Form
1120-S) for details.
Line 6. Enter the distributions reported on Schedule K-1
(Form 1120-S), box 16, code D. Don’t include any Form
1099-DIV distributions (dividend distributions from the
accumulated earnings and profits while a C corporation)
on this line.
You must complete this section if you have personally
loaned money to the corporation.
You must account for each formal note (notes with a
written instrument) made to your S corporation by entering
it separately in its own column. You can’t aggregate
multiple loans into a single column. If you have more than
three loans, use additional copies of Part II.
Loans made to the S corporation that aren’t evidenced
by a written instrument are referred to as an open account
debt and aren’t separately tracked. If an open account
debt has a year-end balance of more than $25,000, it will
be classified as a formal note at the beginning of the next
tax year and must be separately tracked.
Note. If the amount of the distribution is more than the
stock basis before distributions, report the excess amount
as a capital gain on Form 8949, Sales and Other
Dispositions of Capital Assets, and Schedule D. Don’t
increase your stock basis for the amount of capital gain
reported for the excess. See Nondividend distributions in
the Instructions for Form 8949.
Loans that a shareholder guarantees or co-signs
aren’t part of a shareholder’s loan basis except to
!
Leave lines 8a, 8b, and 8c blank if you made an
CAUTION
the extent the shareholder makes a payment on
election under Regulations section 1.1367-1(g). If
!
the loan guaranteed or co-signed.
CAUTION
an election was made, enter this information on
line 13.
Line 16. Enter the balance of each loan to the
S corporation at the beginning of the corporation’s tax
year in a separate column.
Line 17. Enter any new loans made during the tax year
and evidenced by a formal note in a separate column. If a
formal note is refinanced, any increase should be entered
on line 17 under the same column as the original loan.
Line 8a. Enter the amount from Schedule K-1 (Form
1120-S), box 16, code C.
Line 8b. Enter the amount of oil and gas depletion
claimed on your personal return up to your proportionate
share of basis in the property subject to depletion. Any
cumulative depletion in excess of your proportionate
share of basis in the property subject to depletion won’t
reduce your basis.
Advances and repayments made during the
S corporation’s tax year on an open account are netted at
the close of the S corporation’s tax year to determine the
amount of any net advance or net repayment. See
Regulations section 1.1367-2(d)(2). Enter any net
advances on line 17 under the same column as the open
account debt. If this is the first year of the open account
debt, enter the net advance in its own column on line 17.
Don’t enter an amount for depletion not related to oil
and gas property.
Line 8c. Certain credits require the reduction of both an S
corporation's assets as well as the shareholder's stock
basis. See sections 50(c)(1) and (5) for details.
Line 11. Use Part III to figure the total allowable loss and
deduction items from stock basis. Enter the total from
line 47, column (c). This amount can’t exceed the amount
on line 10.
Any debt that exceeded $25,000 at the end of the
prior year is treated as a formal note for purposes
!
CAUTION
of calculating the gain on loan repayment. See
Regulations section 1.1367-2(a)(2)(ii).
Line 12. Use Part II to figure the debt basis restoration, if
Line 19. For a formal note, enter the amount of principal
any. Enter the total from line 23.
repayment specific to each loan.
Instructions for Form 7203 (Rev. 12-2022)
-3-
For open account debt, if the repayments exceed the
advances for the tax year, the net repayment should be
entered on line 19.
Line 34. The character of the gain on repayment is
dependent on whether the debt is evidenced by a formal
note or is an open account.
Line 21. Enter the debt basis of your loan(s) to the
S corporation at the beginning of the corporation’s tax
year.
Debt evidenced by a formal note will result in capital
gain, and should be reported on Form 8949 and
Schedule D.
Any open account debt (including debt referenced in
Regulations section 1.1367-2(a)(2)(ii)) will result in
ordinary gain and should be reported on Form 4797,
Sales of Business Property.
Line 22. Enter the amount from line 17 on line 22.
Line 23. You have reduced debt basis if line 21 is less
than line 16.
Per section 1367(b)(2)(B), if debt basis has been
reduced, it can only be restored with a net increase. The
net increase is the amount by which the items that
increase stock basis per section 1367(a)(1) (for example,
income, tax-exempt income, and excess depletion)
exceed the items that decrease stock basis per section
1367(a)(2) (for example, losses, deductions,
Gain recognized on loan repayment doesn’t
increase basis.
!
CAUTION
Part III. Shareholder Allowable Loss
and Deduction Items
nondeductibles, nondividend distributions, etc.). See
Regulations section 1.1367-2(c)(1).
The corporate losses and other deduction items are
limited to the sum of your stock and debt basis. When
stock and debt basis is insufficient, and there is more than
one type of loss or deduction item that reduces basis, the
amounts allowed as a loss or deduction are allocated on a
pro rata basis. See Regulations sections 1.1366-2(a)(4)
and (5).
The net increase is figured as follows:
Line 4
Minus line 6
Minus line 9
Minus line 13 (as applicable)
Minus line 47(a)
Loss and deductions in excess of basis are suspended
and carried forward indefinitely and the character of the
loss and deduction items is retained.
Minus line 47(b)
If the net increase figured exceeds the total reduction in
debt basis (line 16 minus line 21), then the restoration is
limited to the amount needed to restore debt basis to the
face of the loan.
Part III shows the pro rata allocation and tracks any
loss or deduction carryforward.
Column (a). Enter the loss and deduction amounts for
each item as reported on your Schedule K-1 (Form
1120-S).
Column (b). Enter any loss or deduction items
disallowed due to basis limitations in prior years that were
carried forward.
If you have multiple debts, the net increase is
applied first to restore the reduction of basis in
!
CAUTION
any debt repaid in the tax year to the extent
necessary to offset any gain that would otherwise be
realized. Any remaining net increase is applied to each
debt in proportion to its reduced basis. See Regulations
section 1.1367-2(c)(2).
Column (c). If line 10 is zero, skip column (c).
If stock basis, as reported on line 10, is greater than the
sum of column (a) and column (b), line 47, enter the sum
of each line for column (a) plus column (b) in column (c). If
stock basis, as reported on line 10, is less than the sum of
column (a) and column (b), line 47, enter the pro rata
amount on the corresponding line in column (c). The total
allocation amount reported in column (c), line 47, can’t
exceed the amount reported on line 10.
Line 28. Enter the smaller of the nondeductible expenses
and oil and gas depletion deductions in excess of stock
basis (line 9 minus line 7) or line 27.
If an election is made under Regulations section
1.1367-1(g), enter the smaller of the portion of line 13 that
is attributable to the Regulations section 1.1367-1(g)
election or line 27.
Nondeductible expenses in excess of stock and debt
basis don’t carry forward (unless an election is made
under Regulations section 1.1367-1(g)).
Column (d). If line 29 is zero, skip column (d).
If column (c), line 47, is less than line 10, skip column
(d).
If debt basis, as reported on line 29, is greater than
column (a) plus column (b) minus column (c), line 47,
enter column (a) plus column (b) minus column (c), in
column (d) for each line item. If debt basis, as reported on
line 29, is less than column (a) plus column (b) minus
column (c), line 47, enter the pro rata amount on the
corresponding line in column (d). The total allocation
amount reported in column (d), line 47, can’t exceed the
amount reported on line 29.
Line 30. Enter the amount from line 47(d) in the total
column on line 30.
If you have more than one loan to the corporation,
any allocated reduction is prorated to the loans
!
CAUTION
based on the ratio that each individual loan basis
bears to the aggregate bases of the loans. See
Regulations section 1.1367-2(b)(3).
Instructions for Form 7203 (Rev. 12-2022)
-4-
The allowable losses and deductions from columns (c)
and (d) should be reported on the appropriate areas of
your return (subject to any additional limitations).
excess in column (e) for each line item. If you disposed of
all your stock, see Regulations section 1.1366-2(a)(6).
Column (e). If the sum of column (a) plus column (b)
exceeds the sum of column (c) plus column (d), enter the
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws
and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for individual and exempt organization taxpayers filing this form is approved under OMB control number 1545-0074 and
1545-0047 and is included in the estimates shown in the instructions for their individual and exempt organization tax
return. The estimated burden for all other taxpayers who file this form is shown below.
Recordkeeping. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preparing and sending the form to the IRS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2 hr., 10 min.
15 min.
1 hr., 21 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,
we would be happy to hear from you. See the instructions for the tax return with which this form is filed.
Instructions for Form 7203 (Rev. 12-2022)
-5-