How to Calculate Basis in an S Corp Worksheet

An owner's basis in an S corporation helps determine how much tax the owner owes.

It is the S corporation's responsibility to issue a Form 1120S Schedule K-1 to the owners of the corporation. It is the S Corporation owners' responsibility to track their individual basis. All information for computing the S corporation owners' basis is on Form 1120S Schedule K-1. An owner's basis in an S corporation helps determine how much tax the owner owes for the period. Owners of S corporations must keep up-to-date information on their basis each year.

Things You'll Need

• Form 1120S Schedule K-1 (issued by the S corporation)

Instructions

1. Add income and excess depletion to the original stock basis. The original stock basis is the amount paid for S corporation stock. Income on Schedule K-1 is typically lines 1 through 10.

2. Decrease the basis by any distributions from the S corporation. Property distributions are on line 16 of the Schedule K-1.

3. Decrease the basis for any non-deductible, non-capital expenses and depletion. Non-deductible expenses are located on line 16 of the Schedule K-1.

4. Decrease the basis by any losses or deductions from the S corporation. Losses and deductions are normally found on lines 1 through 14 of the Schedule K-1.

References

• IRS: S Corporation Stock and Debt Basis