Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations
New collection (Request for a new OMB Control Number)
No
Emergency
01/12/2022
12/20/2021
Requested
Previously Approved
6 Months From Approved
70,000
0
265,300
0
0
0
Internal Revenue Code (IRC) Section 1366 determines the shareholderâs tax liability from an S corporation. IRC Section 1367 details the adjustments to basis including the increase and decrease in basis, income items included in basis, the basis of indebtedness, and the basis of inherited stock. Form 7203 is filed by S corporation shareholders who receive non-dividend distributions, claim losses, deductions, and credits (including prior year losses, deductions, and credits) based on their stock and debt basis of the S corporation.
Form 7203 and its separate instructions were developed to replace the 3-part âWorksheet for Figuring a Shareholderâs Stock and Debt Basisâ and its related instructions formerly found in the Shareholder's Instructions for Schedule K-1 (Form 1120-S).
Pursuant to Office of Management and Budget (OMB) procedures established at 5 CFR §1320.13, the Internal Revenue Service (IRS) requests emergency processing for âForm 7203, S Corporation Shareholder Stock and Debt Basis Limitationsâ. This emergency request covers the estate and trust filers. The individual filers, such as sole proprietors, are included in the 1545-0074 renewal, and the tax-exempt filers are included in the 1545-0047 renewal.
The Department of the Treasury and the Internal Revenue Service (IRS) are requesting approval
of a new OMB Control Number under emergency procedures in connection with efforts of the IRS to help S corporation shareholders figure basis loss limitations and address audit issues resulting in improperly claimed losses and deductions.
Internal Revenue Code (IRC) section 1366 determines the shareholderâs tax liability from an S corporation. IRC section 1367 details the adjustments to basis including the increase and decrease in basis, income items included in basis, the basis of indebtedness, and the basis of inherited stock. Form 7203 and its separate instructions replace the 3-part worksheet formerly found in the Shareholder's Instructions for Schedule K-1 (Form 1120-S). The IRS, American Institute of Certified Public Accountants (AICPA), and others agreed a new form was needed to formalize the basis computation to assist taxpayers accurately calculate and attach the required basis computation.
Emergency approval of this collection is essential to the mission of the IRS. The new form will allow taxpayers to accurately compute and properly report their stock and debt basis limitations on their tax returns. It will also provide the IRS with the information needed for tax compliance activities regarding claimed losses and deductions.
The IRS plans to release Form 7203 by January 12, 2022, and thus requests approval of the control number by that date. The IRS sought public comments on the information collection in the Federal Register (86 FR 38204) on July 19, 2021. IRS received numerous comments, which were carefully considered, and IRS provided responses to the comments received. Given the number of public comments and the need to get the form published for the upcoming tax season, the IRS respectfully requests a waiver from the requirement to publish notice in the Federal Register seeking public comment during the period of Office of Management and Budget review. However, additional public comment will be solicited in conjunction with a subsequent extension of the approval to collect this information.
US Code:
26 USC 1366
Name of Law: Pass-Thru Of Items To Shareholders
US Code:
26 USC 1367
Name of Law: Adjustments To Basis Of Stock Of Shareholders, Etc.
US Code:
26 USC 50
Name of Law: Other special rules
US Code:
26 USC 351
Name of Law: Transfer to corporation controlled by transferor
US Code:
26 USC 357
Name of Law: Assumption of liability
US Code:
26 USC 358
Name of Law: Basis to distributees
US Code:
26 USC 6103
Name of Law: Confidentiality and disclosure of returns and return information
This is a new form developed to replace the 3-part âWorksheet for Figuring a Shareholderâs Stock and Debt Basisâ and its related instructions formerly found in the Shareholder's Instructions for Schedule K-1 (Form 1120-S). There was no paperwork burden previously approved by OMB. We are making this submission to request OMB approval.
$0
No
Yes
Yes
No
No
No
No
William Woolf 202 317-5761
No
On behalf of this Federal agency, I certify that the collection of information encompassed by this request complies with 5 CFR 1320.9 and the related provisions of 5 CFR 1320.8(b)(3).
The following is a summary of the topics, regarding the proposed collection of information, that the certification covers:
(i) Why the information is being collected;
(ii) Use of information;
(iii) Burden estimate;
(iv) Nature of response (voluntary, required for a benefit, or mandatory);
(v) Nature and extent of confidentiality; and
(vi) Need to display currently valid OMB control number;
If you are unable to certify compliance with any of these provisions, identify the item by leaving the box unchecked and explain the reason in the Supporting Statement.
Form 7203 Form 7203
Form 7203 - Emergency Justification Memo to OMB_Signed.pdf
2021 Supporting Statement 1545-XXXX - Form 7203_ag.docx
Form 7203