Before you start:
- This form isn't supported in the e-file schema for electronically filed returns and must be manually attached as a PDF attachment. See How do I attach PDF files to federal or state electronic filing for details. When you add the PDF attachment, make sure the Type of Form 7203.
- For tax year 2021 the allowable losses on the 7203 won't automatically flow to the Schedule K-1 Worksheet and will need to be manually entered.
- Who Must File: Form 7203 is filed by S corporation shareholders who:
- Are claiming a deduction for their share of an aggregate loss from an S corporation (including an aggregate loss not allowed last year because of basis limitations),
- Received a non-dividend distribution from an S corporation,
- Disposed of stock in an S corporation (whether or not gain is recognized); or
- Received a loan repayment from an S corporation
- If the shareholder had multiple Stock Blocks in the S-Corporation, additional copies of Form 7203 would need to be manually completed and attached for each additional Stock Block.
Step one: Complete the 7203:
- Open the Individual return.
- Press F6 to bring up Open Forms.
- Type S to highlight K-1 S Corp and click OK.
- Select the K-1 you need the 7203 for.
- Scroll down to Part II - Information About the Shareholder.
- Select the QuickZoom to Form 7203 for stock and basis limitations.
- Complete Part I to show and calculate the Shareholders Stock Basis.
- Complete Part II to show and calculate the Shareholders Debt Basis.
- In Part III enter any current year losses and deductions on line 35-46 column (a).
- In Part III enter any basis carryover losses and deductions on line 35-46 column (a).
- You should now have the calculations required to enter the Schedule K-1.
Step two: Complete the Schedule K-1 Worksheet.
- Go back to the Schedule K-1 worksheet for the Shareholder.
- Scroll down to Part III - Shareholders Share of Current Year Income, Deductions, Credits, Other Items.
- Using the amounts from the 7203 Part III columns C and D enter the allowable losses on the Schedule K-1 worksheet for the shareholder.
- Amounts on the 7203 Part III column E will transfer to next years return.
- Enter any additional items from the Schedule K-1 received that we're not limited by the 7203.
- If you are e-filing the return print the completed Form 7203 to PDF and attach the PDF to the e-filed return. See How do I attach PDF files to federal or state electronic filing for details.