1120 s basis

[TAXMAN]

Anybody got a good 1120-s basis worksheet?

[Catherine]

CFS Tax Tools has a good one in their set.

[TAXMAN]

I did not see one for 1120-s stock basis.

[jklcpa]

TaxBook has one in the Small Business section on page 24-5.

[TAXMAN]

Thanks found it.

[grandmabee]

ATX also has it on the 1120S tax return.

 

[Edsel]

I use the following.  I've never encountered a situation which didn't fit:

1. +Beginning Balance
2. +Partner contributions
3. +Partner's share of increase in guaranteed debt
4. +Partner's share of non-taxable income
5. +Partner's share of Taxable income
6. -Restoration of previously suspended losses (if any)
7. -Partner's share of Non-deductible expenses
8. -Partner's share of Deductible Losses
9. -Partner's share of decrease in guaranteed debt
10. -Partner withdrawals

Guaranteed payments do not affect the calculation, as they should be a deduction for the partnership.  Guaranteed debt is not available for Subchapter S basis calculations, and that is one thing that should be considered when deciding on the type of entity.  Special allocations (such as hot assets) should be computed before partner's share of anything is established.

If a complete partnership return is to be prepared, it should include Schedule L (balance sheet), and reconciling schedules M-1 and M-2.  Preparing these schedules means that "capital balances" should also be encountered and calculated.  It should be emphasized to the client that "Capital Balance" and "Basis" are two different things, as the client will tend to believe his capital balance is his proper measure of ownership in the event of a sale.

 

[Edsel]

As you can tell, I've given the basis calculation for a partnership, not an S-corp.  Upon reading the original post, I edited the message above when discovered (less than 2 minutes).  I received a message that too much time had elapsed and that the message could not be edited.

I don't know what else to say.

[jklcpa]

20 minutes ago, Edsel said:

As you can tell, I've given the basis calculation for a partnership, not an S-corp.  Upon reading the original post, I edited the message above when discovered (less than 2 minutes).  I received a message that too much time had elapsed and that the message could not be edited.

I don't know what else to say.

If the time for editing has lapsed, members still have the ability to entirely hide their posts and post a new one with different information.  The admin team will still be able to see the hidden post but not the general membership.

 

[jklcpa]

Hopefully Taxman's client doesn't have debt basis in this S corp that has been used to allow losses at the personal level. I won't get into that discussion here, but if this is the case, Taxman please let us know and I'll post more information on those calculations.

[Abby Normal]

ATX handles both stock basis and debt basis very well. But I never allow my S corps to have any loan payable shareholders. It's never documented in any way, so I just move it all to add'l paid in capital. Keeps it simple and avoids debt basis calcs.

[jklcpa]

8 minutes ago, Abby Normal said:

ATX handles both stock basis and debt basis very well

It does, and sometimes a new client's prior returns don't include those calculations so it's necessary to calculate outside of the program to arrive at the starting basis for the year we take over. Same idea with that debt basis, you might have to deal with it for a new client.

[Abby Normal]

I hate preparers who don't calc or provide the calc of basis. The return is useless without basis. I've caught several local CPAs deduction 1120S/1065 deducting losses with no basis.

[Catherine]

I have seen basis calc's come with returns only on VERY rare occasions.  In my experience, it's even more rare than depreciation schedules.  Grrrr.....

[Randall]

I provide the basis worksheet with the Schedule K-1 for each shareholder/partner, but not with the entity return.

 

[Catherine]

41 minutes ago, Randall said:

I provide the basis worksheet with the Schedule K-1 for each shareholder/partner, but not with the entity return.

 

Is there a reason for that?  I have always included full K-1 info with the entity return - figuring the entity will get the first query for a K-1 needing replacement.  Then again, I think the largest S-corp I have dealt with only had a half-dozen or so shareholders, all of whom were either related to or had long-standing relationships with the president.

[Randall]

On ‎9‎/‎19‎/‎2017 at 10:27 AM, Catherine said:

Is there a reason for that?  I have always included full K-1 info with the entity return - figuring the entity will get the first query for a K-1 needing replacement.  Then again, I think the largest S-corp I have dealt with only had a half-dozen or so shareholders, all of whom were either related to or had long-standing relationships with the president.

I just thought the basis had more to do with the shareholder's personal return and so I thought I should provide it with the K-1.  Most of mine are one or two shareholders and I do their personal returns.  There have been a few times in the past that a shareholder had their personal return done elsewhere.

[Edsel]

On 9/18/2017 at 9:47 AM, Abby Normal said:

ATX handles both stock basis and debt basis very well. But I never allow my S corps to have any loan payable shareholders. It's never documented in any way, so I just move it all to add'l paid in capital. Keeps it simple and avoids debt basis calcs.

This means that distributions are now dividends instead of repayment of a loan.  Stupid me, right?  because Dividends are not taxable anyway!!   Stupid I may be - but not for this reason.

This is not universally true.  Some states do not honor the subchapter S election, particularly the states that don't have an income tax.  If these states didn't tax like a C Corp there wouldn't be any taxable people to "pass through" to.  Additionally, what would happen if an S corp wanted to change down the road?  Would the historical dividends be sequestred just like if the reverse election were true?