S Corp Stock Basis

[BOB W]

Yes, that is one. You mentioned another also. The other choice is to reduce the Schedule D sale price.

[DONNA ASTON]

My brain is mush right now. Are you referencing the k-1 line nine 1231 gain?

[BOB W]

Don't forget that separatly reported income from the sale reported elsewhere on the 1040 will increase basis on schedule D.

[BOB W]

I know what I want to tell in house CPA right about now but the client doesn't understand the situation as usual and makes it hard. There is not a disclosed loan basis. As I wrote in my first thread I have the numbers on the K-1 and that is not much help at this point. I don't know why 16D on the k-1 would say that if it didn't mean that. She said because it is a sale the distribution would not be included in calculating the cost basis on the Sch D 1040. All she is looking at is the big picture and that is the bottom line for captial gains/losses. In which I calculate to be a gain using the numbers I do have and she is calculating a loss. Sorry confusing

You first have to get to basis for the gain or loss. The distribution is needed in the basis calculation. The distribution has nothing to do with schedule D (directly), only getting to basis, which is then used on schedule D.

Don't forget that separatly reported income from the sale reported elsewhere on the 1040 will increase basis on schedule D.

[DONNA ASTON]

I know what I want to tell in house CPA right about now but the client doesn't understand the situation as usual and makes it hard. There is not a disclosed loan basis. As I wrote in my first thread I have the numbers on the K-1 and that is not much help at this point. I don't know why 16D on the k-1 would say that if it didn't mean that. She said because it is a sale the distribution would not be included in calculating the cost basis on the Sch D 1040. All she is looking at is the big picture and that is the bottom line for captial gains/losses. In which I calculate to be a gain using the numbers I do have and she is calculating a loss. Sorry confusing

[JG EA]

And why on K-1 box 16 does the heading say:

Items affecting shareholder basis

[BOB W]

All allocated income and distributions effect basis. Are there any loans from officers on the books? How did the shareholder acquire his share? If stock was bought he may have outside basis not recorded on the books.

[BHoffman]

If the distribution was in excess of basis and taxed as a capital gain on the form 1040, then it would not decrease basis as that would already be zero.

If that is not the case, then I would just ask the inhouse CPA why this distribution does not decrease basis and wait for her answer. She might not know. Not all CPAs are good at taxes. Some specialize in financial statement work and never see a tax return.

I think if this client's inhouse is busting your chops at this late date, has alienated the prior preparer so you cannot get the basis worksheet, and is insisting on things that don't make sense....well, that's up to you.

Sometimes we have to do what we have to do. Sometimes there is a failure to communicate Hahahaha!

http://www.youtube.com/watch?v=SnO9Jyz82Ps&NR=1

[DONNA ASTON]

is anyone able to comment on my last post? The CPA will not get off my back I have other returns to deal with tonight.

[DONNA ASTON]

I agree and working on getting the 2007 adj basis. I have the worksheet out right now from TTB. The in house CPA gave me the K-1 to prepare the basis and this is where the problem started. Also she does not agree that the distribution in box 16D of the K-1 needs to be incorporated in the worksheet as a decrease. The client also received 1231 income and 1250 income does that not work into part of this calculation?

[Snaggletoof]

Sch D 1040

Donna, thanks for joining our forum, and hope you will return. There is a good worksheet in TTB for calculation of S corp Basis and Loan Basis. If someone has provided you with basis calculations from prior years, this assures that you have a chance at being able to successfully calculate the current basis. Without knowing the basis from previous year, it is virtually impossible.

I think too much emphasis (and possible confusion) has been placed on the Sch D, 1040. Actually, the Sch D is the very last link in the chain that is affected and has more to do with the 1040 preparation than anything else. The basis should be calculated long before Sch D is prepared.

[DONNA ASTON]

sorry I meant a decrease in distribution. not stock

[DONNA ASTON]

Thanks for the welcome. I have been on here one other time and it is a great message board. In order obviously for a loss on Sch D the cost basis would have to be more than the selling price and I don't see that given what little info I have. Also stock basis below zero creates a gain correct? Using the worksheet and including on the line item a decrease in stock basis the sch D would have a gain not a loss.

[BHoffman]

I understand the worksheet and have had them provided by the person preparing the corporate tax return or have provided to them. I would still need the proper information to complete the worksheet and at this point I don't have it.

I agree with you that the distribution does indeed affect basis. I wonder if the distribution was in excess of it?

Thank you for understanding how hard it is to know how much the poster (that's you) is aware of regarding complicated things like shareholder basis worksheets. Glad you don't have to learn it and already know how it works. Agree that this client cannot really give you enough info. Good luck and welcome to the message board

[DONNA ASTON]

I understand the worksheet and have had them provided by the person preparing the corporate tax return or have provided to them. I would still need the proper information to complete the worksheet and at this point I don't have it.