Form 7203

Form 7203 is used by S corporation shareholders to figure potential limitations on their share of the S corporation’s deductions credits and other items that can be deducted on their individual income tax return. The form helps determine the shareholder’s stock basis and debt basis which affects how much loss deduction income or gain the shareholder may report. It is attached to the shareholder’s tax return when required.

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Frequently asked questions

Form 7203 is used by S corporation shareholders to figure potential limitations on their share of the S corporation’s deductions credits and other items that can be deducted on their tax return based on their stock and debt basis. The form must be attached to the shareholder’s individual tax return when required for events such as loss deduction distributions stock disposition or loan repayments.
S corporation shareholders who are claiming a deduction for their share of an aggregate loss from an S corporation received a non-dividend distribution disposed of stock in an S corporation or received a loan repayment from an S corporation must file Form 7203.
Form 7203 is submitted to the Internal Revenue Service by attaching the completed form to the shareholder’s individual income tax return when the return is filed either on paper or electronically by the tax filing deadline.

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