Basis Basics for S Corporation Shareholders (Completed)

Date: Tuesday, October 27, 2020
Instructor: James R. Hamill
Begin Time:  11:00am Pacific Time
12:00pm Mountain Time
1:00pm Central Time
2:00pm Eastern Time
CPE Credit:  1 hour for CPAs
1 hour Federal Tax Related for EAs and OTRPs
1 hour Federal Tax Law for CTEC

Why Basis in S Corporation Stock and Debt Is Vital to Utilization of Losses, Computation of Gain or Loss upon Disposition, and Distribution Taxability

Shareholder basis in the stock and debt of an S corporation is vital for three reasons: First, under Section 1366, a shareholder may only utilize losses to the extent of the basis in the stock and debt. In addition, when a shareholder sells stock, basis in the stock will help determine the gain or loss resulting from the sale. Lastly, the shareholder's basis in S corporation stock will, in part, determine the taxability of any distributions made by the corporation to the shareholder.

In this one-hour CPE webinar nationally recognized tax expert and instructor James Hamill, CPA, Ph.D., will walk you through the basics of a shareholder's basis in both the stock and the debt of the S corporation.

This session will begin by discussing the rules for determining stock basis, with special attention given to the ordering rules and the impact of distributions. Next, he will explain the special rules used to compute a shareholder's basis in amounts loaned to the S corporation and the role this "debt basis" plays in determining the amount of the S corporation's loss that may be utilized by the shareholder. Throughout this class, we will point out traps for the unwary and common mistakes made by practitioners in determining stock or debt basis.

Who Should Attend
All tax professionals who advise clients on tax planning issues will benefit from this webinar.

Topics Covered

  • Ordering rules for determining stock basis
  • Differentiating between stock basis and the Accumulated Adjustments Account
  • Unique rules for determining a shareholder's basis in amounts loaned to the S corporation
  • Common structures that do not provide a shareholder debt basis in an S corporation
  • How to utilize losses of the S corporation against stock and debt basis, and how stock and debt basis are subsequently restored when income is earned
  • Consequences of repayment of debt that has been previously used to absorb losses
  • The effect recently enacted final regulations will have on debt basis

Learning Objectives

  • Identify the importance of a shareholder's basis in the stock and debt of an S corporation
  • Recognize how to compute stock and debt basis
  • Identify the role stock and debt basis play in utilizing S corporation losses


Instructional Method
Group: Internet-based

NASBA Field of Study
Taxes (1 hour)

Program Prerequisites

Advance Preparation

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