Yes it does increase basis. There is no basis shown on an S Corp K-1, or on a 1065 K-1 for that matter. Tax basis capital on 1065 K-1s may or may not equal basis.
If the software is calculating shareholder or partner basis, I assume it would pick up this tax exempt income and add to basis, but I could be wrong. Haven't tested it yet. If it doesn't, I would input in the Other Increases to Basis line.
They added a field in Income (Screen 13) for the PPP loan. However, it doesn't work at all and doesn't show up anywhere. Entering it on M-1, as Other Tax-exempt Income, will carry it to Book Income, OAA, and Basis where it should be found.
So far, California treats the $1K EIDG grant as taxable income for California. Is there an input field in Lacerte to input taxable EIDG grant for California? In the Screen 16 for individual module Schedule C, I only see an input field to enter expenses paid with PPP loan. Nothing about the EIDG grant.
There is a place for PPP forgiveness in the 1120S and 1065, but not Schedule C (yet). The line for PPP forgiveness should include EIDL grants and loans, since they all the same for tax purposes, but it doesn't mention either one. There is suppose to be a line for nonconforming states, but it hasn't been implemented yet. Expenses paid with PPP money is a moot point after the 12/27 bill and should not be a factor anywhere.