Basis: S Corp Shareholders & Form 7203 (Completed)

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This online course provides a comprehensive and practical deep dive into shareholder basis calculations for S corporations, with a strong focus on Form 7203 compliance and risk management. As IRS scrutiny of basis continues to increase, tax practitioners must be able to accurately calculate, document, and, when necessary, reconstruct shareholder basis to support loss deductions and distributions.

This course walks through stock and debt basis concepts from the ground up, explains how income, losses, deductions, and nondeductible expenses flow through to basis, and highlights the most common and costly basis errors found on S corporation returns. Participants will also examine real‑world issues such as incoming and exiting shareholders, asset contributions and distributions, PPP loan forgiveness, employee retention credits, and other tax‑free grants that frequently distort basis if not handled correctly.

Who Should Attend
This course is ideal for CPAs, enrolled agents, public accountants, and other tax practitioners who prepare, or review S corporation returns and want to reduce audit risk while confidently supporting loss deductions and distributions.

Topics Covered

• Overview of S corporation shareholder stock and debt basis rules
• Form 7203 overview and preparation requirements
• Form 7203 Part I: Shareholder stock basis calculations
• Form 7203 Part II: Shareholder debt basis and repayment issues
• Form 7203 Part III: Allowable losses and deduction limitations
• Allocating pass‑through items to stock and debt basis
• Basis limitations and interaction with Form 6198
• PPP loan forgiveness, ERTC credits, and other tax‑free assistance impacts on basis
• Asset contributions, distributions, and stock transfers
• Incoming and exiting shareholders
• Preparing and filing multiple Forms 7203
• Reconstructing basis and correcting prior‑year errors
• IRS compliance considerations and practitioner exposure

Learning Objectives

• Calculate initial and ongoing stock and debt basis for S corporation shareholders
• Prepare Form 7203 accurately to support allowable losses and deductions
• Allocate pass‑through income, losses, deductions, and nondeductible expenses to shareholder basis
• Identify transactions and events that commonly cause shareholder basis errors, including COVID‑related relief provisions
• Reconstruct or correct shareholder basis when historical records are incomplete or inaccurate
• Assess practitioner compliance risks related to improper basis reporting

Level
Basic

Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (2 hours)

Program Prerequisites
None

Advance Preparation
None