Drake Tax - 1040 - Distributions in Excess of Basis from 1120-S

Article #: 16511

Last Updated: October 21, 2024

 


Tags: Drake Tax1120S

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A distribution reported in box 16, code D flows to Form 7203, line 6. If the amount is greater than line 5, the difference is reported on Form 8949 and Schedule D.

Image of Form 7203, part I.

Review Form 8949, Part II. Box F is checked and the description shows as Excess Distribution with the name and EIN of the S corporation listed:

Image of Form 8949, part II showing excess distribution.

Note  Distributions in excess of stock basis are treated as capital gains regardless of whether or not the taxpayer has debt basis.

See the IRS' page S-Corporation Stock and Debt Basis for more information about basis and distributions.