S Corporation Shareholder Basis

Free CPA REG (Taxation & Regulation) lesson in Federal Taxation of Entities. 16 min read, ~2,471 words.

Stock basis = initial investment, plus pro rata income (including tax-exempt), minus distributions, minus nondeductible expenses, minus deductible losses. Never below zero. Debt basis exists only for direct shareholder-to-corporation loans. Guaranteed bank loans give zero debt basis. Adjustment order: (1) income, (2) distributions, (3) nondeductible expenses, (4) losses. §1366(d) caps...

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V.C3

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