Drake Tax – 1040: K1S and K1P – Negative Basis

Article #: 10097

Last Updated: October 18, 2024

 


Tags: Drake TaxK11120S

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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)

  • Losses

  • Separately stated items

  • Nondeductible expenses

  • Non-dividend distributions

  • 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

  • Money and adjusted basis of property distributed

  • Losses

  • Nondeductible expenses

  • Depletion for oil and gas

Resources

For more information, see: