form 7203

Forum|Forum|3 years ago
February 20, 2023
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Trying to fill out form 7203 because I have something entered in line 16 on my schedule k1. Where do I enter this infomation? My shareholder worksheet puts it under reduction for non taxable distributions. Thanks

S-Corp

Best answer by PatriciaV

This info goes on Form 7203 Line 6. According to IRS Instructions for Form 7203, for Line 6: Enter the distributions reported on Schedule K-1 (Form 1120-S), box 16, code D.

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.

@holly_s

Mike9241

that is correct your tax basis in an S-Corp goes up by income but down by those nontaxable distributions

example extremely simplified.

starting basis $1K - cash. income $5K - all cash. now tax basis is $6K - all cash. nontaxable distributions (basically the income being distributed to the owner) $5K- all cash. now basis is back down to $1K which is the cash

holly_sAuthor

what line do I enter the information from line 16D on the form 7203?

PatriciaVAnswer

Employee

This info goes on Form 7203 Line 6. According to IRS Instructions for Form 7203, for Line 6: Enter the distributions reported on Schedule K-1 (Form 1120-S), box 16, code D.