Gain on Repayment of Loan and Form 7203

[AlexBeaudry]

Before the form 7203, lacerte would export repayment of shareholder loan to the personal tax return on the schedule D.  With the 7203, it lists the repayment as non-taxable on line 26 and line 33 so it doesn't show as a reportable gain (line 34) which means it doesn't export it as a gain to the taxpayer.  How do you tell Lacerte it's taxable?

[TaxGuyBill]

Maybe I'm missing something, but why would a repayment of a shareholder loan be taxable?

[abctax55]

@TaxGuyBill 

If the loan has been used a *basis* to allow deducting prior losses, the subsequent repayment can become a taxable transaction.

@AlexBeaudry 

All entries dealing with this are in Screen 20.2, under *Sections* - Basis Limitations (7203).   You may have to do some overriding (Stock basis at beginning, loan balance at beginning, etc )if you are sure that the repayment is taxable.  

[TaxGuyBill]

@abctax55   Thank you, I didn't think about claiming losses due to the Debt Basis.

[AlexBeaudry]

Thank you for the reply.  I had tried adding to screen 33 as an override to capital gains and although it will export it correctly to the tax return - it doesn't change the 7203 to reflect that it's taxable.

My other issue with Repayment of Loan is that the basis on the balance sheet (R/E plus income plus s/h loan) won't tie out to the 7203 basis as the gain increases the basis on the 7203 so it's higher than the balance sheet.  We usually keep a sheet that has the cumulative gain so we know why there is a difference, but I'm not sure on how to deal with this on the 7203 or if it's ok to have that discrepancy!! 

[sjrcpa]

Basis, on 7203 or elsewhere, will rarely agree to any Balance Sheet amounts.