Calculating tax basis for a S-Corp

Home Fairmark Forum Taxation of Investments Calculating tax basis for a S-Corp

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  • #5309
    paulsiu
    Participant

    I invested in a friend’s S-corp about 20 years ago. Recently, it closed down and I received a check for the liquidation. I am trying to calculate the basis of the stock so I can figure out how much tax to pay. What should I be looking for? I have a stack of 20 years of Schedule K-1.

    Paul

    #5343
    ruth
    Participant

    The instructions for Schedule K-1 (Form 1120-S) contain worksheets for computing the basis of S corporation stock. Complete a worksheet for each year you owned the stock.

    https://www.irs.gov/pub/irs-pdf/i1120ssk.pdf

    #6627
    Lewis-H
    Participant

    The S Corporation stock basis of your investment starts with your initial capital contribution and your initial cost of the stock purchased. Stock basis is increased by the income you receive and decreased, but not below zero, by any loss, deductions or distributions on the Form K-1 you receive.

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