Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations

Forms and Documents

Forms and supporting documents for this ICR

Document	Type	Status	Availability
Form 7203 Form 7203	Form	New	Repair queued
Form 7203 - Emergency Justification Memo to OMB_Signed.pdf	Supplementary Document	Uploaded 2021-12-20	Missing upstream
2021 Supporting Statement 1545-XXXX - Form 7203_ag.docx	Supporting Statement A	Uploaded 2021-12-17	Available

IC Document Collections

Information collection document groups

IC ID	Collection	Type	Status	Form
249911	Form 7203	Form	New

ICR Details

OMB Control No:	ICR Reference No: 202110-1545-015
Status: Received in OIRA	Previous ICR Reference No:
Agency/Subagency: TREAS/IRS	Agency Tracking No:
Title: Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations
Type of Information Collection: New collection (Request for a new OMB Control Number)	Common Form ICR:  No
Type of Review Request: Emergency	Approval Requested By: 01/12/2022
Date Submitted to OIRA: 12/20/2021

table that charts list comparision

	Requested	Previously Approved
Expiration Date	6 Months From Approved
Responses	70,000	0
Time Burden (Hours)	265,300	0
Cost Burden (Dollars)	0	0

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Abstract: Internal Revenue Code (IRC) Section 1366 determines the shareholder’s 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 “Worksheet for Figuring a Shareholder’s Stock and Debt Basis” and its related instructions formerly found in the Shareholder's Instructions for Schedule K-1 (Form 1120-S).

Emergency Justfication: Pursuant to Office of Management and Budget (OMB) procedures established at 5 CFR §1320.13, the Internal Revenue Service (IRS) requests emergency processing for “Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations”. 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 shareholder’s 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.

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Authorizing Statute(s): 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
  

Citations for New Statutory Requirements: None

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Associated Rulemaking Information
RIN:	Stage of Rulemaking:	Federal Register Citation:	Date:
	Not associated with rulemaking

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Federal Register Notices & Comments
60-day Notice:	Federal Register Citation:	Citation Date:
	86 FR 38204	07/19/2021
Did the Agency receive public comments on this ICR? Yes

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Number of Information Collection (IC) in this ICR: 1

table that charts list of burden

IC Title	Form No.	Form Name
Form 7203	7203	S Corporation Shareholder Stock and Debt Basis Limitations

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ICR Summary of Burden

table that charts list of burden

	Total Request	Previously Approved	Change Due to New Statute	Change Due to Agency Discretion	Change Due to Adjustment in Estimate	Change Due to Potential Violation of the PRA
Annual Number of Responses	70,000	0	0	70,000	0	0
Annual Time Burden (Hours)	265,300	0	0	265,300	0	0
Annual Cost Burden (Dollars)	0	0	0	0	0	0

Burden increases because of Program Change due to Agency Discretion: Yes

Burden Increase Due to: Miscellaneous Actions

Burden decreases because of Program Change due to Agency Discretion: No

Burden Reduction Due to:

Short Statement: This is a new form developed to replace the 3-part “Worksheet for Figuring a Shareholder’s Stock and Debt Basis” 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.

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Annual Cost to Federal Government: $0

Does this IC contain surveys, censuses, or employ statistical methods? No

Does this ICR request any personally identifiable information (see OMB Circular No. A-130 for an explanation of this term)? Please consult with your agency's privacy program when making this determination.     Yes

Does this ICR include a form that requires a Privacy Act Statement (see 5 U.S.C. §552a(e)(3))? Please consult with your agency's privacy program when making this determination.     Yes

Is this ICR related to the Affordable Care Act [Pub. L. 111-148 & 111-152]? No

Is this ICR related to the Dodd-Frank Wall Street Reform and Consumer Protection Act, [Pub. L. 111-203]? No

Is this ICR related to the American Recovery and Reinvestment Act of 2009 (ARRA)? No

Is this ICR related to the Pandemic Response? No

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Common Form ICR:  No

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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:

(a) It is necessary for the proper performance of agency functions;

(b) It avoids unnecessary duplication;

(c) It reduces burden on small entities;

(d) It uses plain, coherent, and unambiguous language that is understandable to respondents;

(e) Its implementation will be consistent and compatible with current reporting and recordkeeping practices;

(f) It indicates the retention periods for recordkeeping requirements;

(g) It informs respondents of the information called for under 5 CFR 1320.8 (b)(3) about:

(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;

(h) It was developed by an office that has planned and allocated resources for the efficient and effective management and use of the information to be collected.

(i) It uses effective and efficient statistical survey methodology (if applicable); and

(j) It makes appropriate use of information technology.

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.

Certification Date: 12/20/2021

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