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INCOME USED TO RESTORE DEBT BASIS

Forum|Forum|5 years ago
March 2, 2021
2 replies
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THE S-CORP SHAREHOLDER BASIS COMPUTATION INCLUDES THE ADJUSTMENT TO RESTORE DEBT BASIS, BUT I DO NOT SEE HOW TO INPUT THAT IN THE INDIVIDUAL MODULES, AS IT DID NOT IMPORT. THERE IS A LINE FOR IT ON THE INDIVIDUAL'S BASIS WORKSHEET, BUT IT IS BLANK. WHERE EXACTLY CAN I INPUT THIS AMOUNT?

Lacerte Tax

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Best answer by PhoebeRoberts

Thanks for the tip! This is a weird year, as there is PPP forgiveness, which flows through as tax-exempt income. Maybe that is my problem. Here are my inputs:

S-Corp K-1 input

S-Corp Basis schedule:

Individual module as imported from S-Corp module:

Individual basis statement:

My thought is that the stock basis should be zero, as opposed to the $10678 (which is the income used to restore debt basis). I did override the beginning debt basis to include the $10678, so that my ending debt basis agreed to the S-Corp module debt basis. Guidance is much appreciated!

Then you do have income! Yeah, I agree it's the PPP that's the problem, because I can replicate your results.

If you omit the PPP income from the Line 16B Other tax-exempt income field, and override the Current Year Income from S-corp, that seems to get a tolerable presentation. I agree that this is not a particularly desirable course of action or presentation, but it seems to come out okay in the end - no diagnostics, at least.

Edited because I typo'd my Lacerte input:

PhoebeRoberts

Intuit Community Champion

Income flowing through from the K-1 in excess of distributions and deductions automatically restores debt basis before stock basis. No special entry is needed.

G

gmb1040Author

Level 3

Thanks for your response, Phoebe. It does calculate correctly, and automatically, in the S-Corp module, but it is not calculating in the individual module. I had to override the beginning basis and manually input the income used to restore debt basis; however, the pre-printed line description "income used to restore debt basis" in the basis limitations statement is blank, and I do not see anywhere to input it. I am guessing this is not going to be an isolated problem, so I would like to know how to handle this from now on.

PhoebeRoberts

Intuit Community Champion

In the 25 years I've been using Lacerte, I have never had to override the debt basis calculation in the 1040 package. Nor do I have to make any overrides to get it to do it right this year.

Basis worksheet:

K-1 input:

Basis Limitation input:

KennethS

Level 3

I was doing research on an email someone sent recently and this was the first google search. It looks to be an error in the program. We are aware of the issue. Once the update comes this week this workaround should not be required. No additional input would be required the 1040 will match the 1120S calculations. @PhoebeRoberts awesome workaround.

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