Question

Schedule K-1 (Form 1120-S) - Figuring Adjusted Basis of Shareholder Interest

Accepted Answer

Information on shareholder basis can be found in the instructions for Schedule K-1 (Form 1120-S).

Per IRS Shareholder's Instructions for Schedule K-1 (Form 1120-S) Shareholder's Share of Income, Deductions, Credits, etc.(For Shareholder's Use Only), on page 2:

Basis Limitations

Generally, the deduction for your share of aggregate losses and deductions reported on Schedule K-1 is limited to the basis of your stock and loans from you to the corporation. For details and exceptions, see section 1366(d). The basis of your stock is generally figured at the end of the corporation's tax year. Any losses and deductions not allowed this year because of the basis limit can be carried forward indefinitely and deducted in a later year subject to the basis limit for that year.

You are responsible for keeping the information needed to figure the basis of your stock in the corporation. Schedule K-1 provides information to help you figure your stock basis at the end of each corporate tax year. The basis of your stock (generally, its cost) is adjusted annually as follows and, except as noted, in the order listed. In addition, basis may be adjusted under other provisions of the Internal Revenue Code. You should generally use the Worksheet for Figuring a Shareholder’s Stock and Debt Basis to figure your aggregate stock and debt basis.

To navigate to the Worksheet for Figuring a Shareholder's Stock Basis:

Online Navigation Instructions

From within your TaxAct Online return, click Print Center down the left to expand, then click Custom Print.
Check what you wish to print (the top section contains individual forms or schedules and the bottom section contains documents or worksheets). You may need to scroll down in the section to locate the items.
Click Print, then click the PDF link. Click the printer icon or the save icon (available when you hover your mouse over the PDF form) to print or save the PDF copy.

Note. If you see a message indicating you have not paid your return fees, click the View/Pay your return fees link, which will direct you through the Paper Filing steps. Continue through the screens until you have processed the payment for your product fees and then repeat the steps to print.

Desktop Navigation Instructions

Start your TaxAct Desktop program, then click Forms in the top left corner.
Click to expand the Federal folder, then click to expand the Worksheets folder.
Scroll down to the Schedule K-1 - Shareholder's Basis Worksheet section.
Select the specific Shareholder Stock Basis Worksheet needed.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.