Drake Tax – 1040: K1S and K1P – Negative Basis
Article #: 10097
Last Updated: October 21, 2024
The IRS does not allow a negative basis; however, basis may be decreased to (but not below) zero for the following items.
Note If a partner or shareholder receives more in distributions than the partner or shareholder has in basis, the result may be taxable. See Drake Tax - 1040 - Distributions in Excess of Basis from 1120-S or Drake Tax - 1040 - Distributions in Excess of Basis from 1065 for details.
Shareholder Stock Basis – Form 7203 (1120-S)
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Losses
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Separately stated items
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Nondeductible expenses
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Non-dividend distributions
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Depletion for oil and gas
Note Non-deductible expenses only get carried forward if the taxpayer has made the irrevocable election to take losses and deductions before non-deductible expenses. To indicate this in Drake Tax, select box E on screen K1S > Basis (7203) tab.
Partner Basis
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Money and adjusted basis of property distributed
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Losses
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Nondeductible expenses
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Depletion for oil and gas
Resources
For more information, see: