These shareholder assets have tax bases which may change regularly as a result of corporate events.The beginning basis for stock is the amount the shareholder invested to obtain the stock.
Linda probably participates materially in the corporation, but her adjusted gross income exceeds $150,000, so she does not benefit from the passive activity rental real estate loss exception.
The items comprising her taxable income from the corporation would be: Item Amount Ordinaryincome$188,000 Interestincome8,000 Netlong-termcapitalgain22,000 Charitablecontributions(3,000) Section179expense(7,000) Medicalinsurance premiums(25x$1,200)(300) Total$207,700 The rental real estate loss reported on Form 8582 would be non- deductible (assuming Linda does not have offsetting passive income) and carryover.
Capital contributions by shareholders to the corporation; b.
Separately stated income items (whether taxable or not); c. Excess of depletion deductions over basis of property subject to depletion. Non-deductible expenses that are not properly chargeable to a capital account also reduce stock basis; b.
Debt Qualifying as Basis If an S corporation shareholder desires to take immediate deductions rather than wait until the S corporation is profitable, it is important to be aware of how to create S corporation basis.