The Biggest Challenge for S Corporations in 2022 Filing Season
Attention to those who own an S corporation, filing your 1120S and 1040 is about to get more complicated! Certain S-Corp shareholders, especially those with 100% ownership, do not maintain a proper accounting system, or do not have financial statements available may not be able to fulfill the latest requirement from IRS to disclose their tax and debt basis.
This video is very important because the IRS recently drafted Form 7203, to force S Corp owners to disclose their Stock and Debt Basis. The final form is expected to be available for filing with 2021 shareholder returns; however, it is still currently pending from final release by the IRS. 7203 is to be filed by S corporation shareholders if certain conditions exist. We discuss in detail what these conditions consist of and other relevant information.
It is the S Corporation shareholder’s responsibility to maintain tax basis, and it can be complicated to account for all the data, especially for business owners who do not track their basis historically. This form is beneficial, as it will ensure basis is consistently maintained throughout the year. Be sure to watch and be up to date on how form 7203 works, what it is, how to fill it out, and who must file it.