Per the IRS Education Provider Standards this course must be COMPLETED by 12/31/2026 to receive credits. NOTE: Go to My Professional Profile in your CCH CPELink account settings to ensure your name, and PTIN number; matches your PTIN card
Understanding how to calculate S corporation shareholder stock basis accurately is extremely important. A shareholder may only utilize losses to the extent of basis in stock and in bona fide debt owed from the S corporation to the shareholder. Further, the shareholder's basis in S corporation stock is important to determining the taxability of any distributions made by the corporation to the shareholder. And of course, stock basis helps determine gain or loss on the ultimate sale of the S corporation stock, including in an exit strategy transaction such as an acquisition.
This course covers the rules for calculating S corporation shareholder stock basis, including initial basis, adjustments for income and losses and distributions, and the ordering rules for adjustments. We will use realistic examples to discuss common scenarios.
Publication Date: December 2023
Topics Covered
- Allocations of income and loss and their effect on S corporation shareholder stock basis
- The relationship between stock basis and debt basis
- Situations in which S corporation shareholder basis is relevant, including distributions and sale of stock
- Mechanics of calculating S corporation shareholder stock basis
- Effects of capital contributions, distributions and allocation of income and loss on S corporation shareholder stock basis
- Intersection of debt basis and stock basis rules
Learning Objectives
- Identify how to calculate S Corporation shareholder stock basis accurately
- Identify the maximum number of different classes of stock permitted when forming an S Corp
- Identify the type of entity a corporation will generally be treated as for tax purposes if an S Corp election is made
- Identify what the second step in the order of adjustments relates to
- Identify the limit of shareholders in order to qualify as an S Corp
Level
Basic
Instructional Method
Self-Study
NASBA Field of Study
Taxes (2 hours)
Program Prerequisites
None
Advance Preparation
None
Instructor
Jennifer Kowal
Jennifer Kowal, JD, has been a tax professor and the director of the graduate tax program at Loyola Law School in Los Angeles since 2003. Loyola’s graduate tax program offers an LL.M. in Taxation for attorneys and a Master in Tax Law for non-lawyers. Professor Kowal teaches courses in advanced income taxation, income tax timing issues, corporate taxation, and tax research, among others. Prior to teaching at Loyola, Professor Kowal taught in the International Tax Program at Harvard Law School.
She also practiced law with the firms of Irell & Manella in Los Angeles and Ropes & Gray in Boston, advising clients on the taxation of various business transactions, including cross-border, partnership and corporate structures. Professor Kowal holds a BS in Accounting with distinction from the University of Kansas, and a JD from UCLA School of Law, where she was a member of the Order of the Coif.