DESCRIPTION
This module provides a comprehensive foundation in S corporation shareholder basis, including the rules governing basis adjustments, ordering limitations, and the tax consequences of insufficient basis. Participants will work through multiple case studies that require application of basis calculations in operational and distribution scenarios. Concept-focused exercises reinforce key principles, while calculation-based exercises guide participants through determining stock and debt basis under varying fact patterns. By the end of the module, learners will be equipped to analyze basis-related issues and accurately compute shareholder basis in practice.
LEARNING OBJECTIVES
- Explain the impact of shareholder basis on the deductibility of losses and the taxability of distributions.
- Identify items that increase and decrease S corporation shareholder stock and debt basis.
- Apply the ordering rules governing adjustments to shareholder basis.
- Calculate shareholder stock and debt basis under various scenarios.
- Analyze the shareholder basis implications of an S corporation with prior C corporation earnings and profits.
- Differentiate between shareholder stock basis limitations and at-risk limitations.
