7203 4d

[Raili Schmoldt]

Specifically, does anyone know if IRS will accept a required form as a pdf attached to the 1040 return? Or are we forced to print out the ProSeries return, insert the manually prepared Form(s) 7203 to the 1040 return, and mail it in? Obviously, mailing the return in is not an ideal option given the state of the IRS.

I am very interested in knowing how you are going to handle this and if you are going to mail the 1040 return in, how you are going to explain this to your clients. In my case, while the percentage of clients this will affect are small, their returns are usually more complicated and detailed and represent a much greater percentage of my billings. I would very much like to keep these clients happy.

Many of us have vented here about the poor level of customer service. It appears to me that communication is just as bad. Why is it so difficult to get a straight answer from ProSeries as to the status of this form?

The problem is we should not have to manually prepare the form. Proseries has known the form is coming. You would have thought they would have been a bit proactive based on the irs draft and been in a position to tweek it once IRS finalized the form.

And if the programmers are not competent enough to have the form ready in a timely manner, you would hope they would provide some guidance re: alternatives that IRS would accept. We have always attached a pdf of the basis worksheet (from the S-corp module) to the 1040. It would be nice to know if that would be acceptable to IRS for this first year.

Working on new 7203 form with 2 K-1s, husband and wife. The 7203 worksheet shows TP name and SS on both forms 7203 even though 2nd one is linked to the spouse's K-1 input sheet. Maybe there needs to be a checkbox to show this is spouse's 7203? I can not figure out how to print the 7203 pdf for wife's basis. Any thoughts? Thanks!

I just did one and it was unbelievable to have to manually input stuff that could carry over from the k-1. I did not get an error message to pdf the 7203 to the return though. My error check came back all green. So will it efile or not?

@josephfolsomcpa I can't speak for next years product but I'll keep it in mind as we get more information next season. It's common for brand new forms to be included as attachments.

In the meantime: Some new forms may need to be included as PDF attachments

However, ProSeries has the limitation of need to jump through hoops to attach it - you need to print the page to a PDF, then go through the steps to attach it. Other programs just have one-click button to attach such things.

Attaching forms as PDFs is common for new forms. This is because each form & it's calculations and capabilities have to digitally align and agree with all the variables the IRS can receive. It's called the "schema".

As an S-Corp member, I must file Form 7203. While TurboTax Deluxe Desktop tells me I need to fill out the form and opens a mini window for me to enter the information, most of what is on that form comes directly from the Schedule K-1 (Form 1120-S) that I entered, but I have to enter it again and TT doesn't validate that what I put into the 7203 matches what's on the K-1. To make matters worse, Line 8a of form 7203 is protected because the value is pulled from another place, but it is not pulling from where the IRS says it should. According to the IRS Instructions for Form 7203, Line 8a should come from Schedule K-1 (Form 1120-S), box 16, code C. However, TurboTax Deluxe Desktop does NOT use this number from the K-1. After much research online, I realized that I had to either override that field or put the number into Line B, Nondeductible expenses of the "Stock and Debt Basis Limitations Smart Worksheet" and it will get pulled into Line 8a.

Form 7203 is included in TurboTax for the taxpayer to complete, based on historical transactions for their investment. You may need to adjust your K-1 entries to populate this form appropriately. There are no current ongoing investigations or upgrades planned that would affect Form 7203 during this tax season.

Thanks. I'm not concerned about this tax year, but I'm hoping this could be updated for a future tax year. I understand that some adjustments may need to be made, but why not pull what can be pulled from the K-1 automatically and let the user add/adjust the remaining items. Per the IRS Instructions, Part I lines 3a through 3m and 8a and most of Part III column (a) come directly from the K-1. It would just be nice if TurboTax pulled these automatically to prevent user error when entering them.

Rich mentioned we should enter the information that is to be imported into line 8a in the "Stock and Debt Basis Limitations Smart Worksheet." Where do I find this worksheet? I am using the desktop version of TurboTax.

The Stock and Debt Basis Limitations Smart Worksheet is part of Form 7203 in TurboTax. Just go to View Forms and you should see Form 7203 in the form list under your K-1. Open it up and you will see the worksheet in the middle of the form. Line B of the worksheet is where you want to put these Nondeductible expenses.

Thank you SO MUCH for posting this. I had the exact same issue and trouble. I was with a live expert for about 20 minutes without any success. In the end my search came up with your post on how to get the correct information into line 8.a. This information is important (assuming not $0) because otherwise your reported stock basis at the end of the tax year will not be correct and could get flagged the following year.

I believe there is an error in how the form 7203 is checking itself. Line 3a states "Ordinary business income (enter losses in Part III)". Unless I'm missing something (entirely possible since we are talking accounting here) this literally means you CAN have a gain on line 3a AND a loss in Part III. That's the whole purpose of Part III. Yet if you do have a gain (I did) and do have a loss (I had a small deduction which gets entered into Part III) then you get an error and are not allowed to e-file your taxes. Hopefully someone will either fix this or maybe point out how you can in fact have a gain and report a loss in Part III correctly?

To anyone with the same issue that just wants to file their taxes (and NO I am NOT an accountant and you should for sure NOT take my advice on anything especially taxes)... I deleted everything in Part III (not put a 0 literally delete every blank so nothing is there). I then went to line 6 and just added my deduction to that line so my stock basis (line 15) would still read correctly. THEN (and this is an important step) DO NOT forget to hit the RECALCULATE button at the bottom. Let it put 0's where it wants them and fix any math errors. Now you can double check the numbers and hopefully your line 15 should read the same as it does on your K-1 form. Doing this got me the correct Stock Basis amount and finally I was able to e-file without the error that cost me an hour of my life.

Line 12 Other Deductions on my K-1 was listed as type A with a small amount listed there. As I understood the 7203, this would go down in Part III and it think it was line 41. The form in turbo tax had a much nicer bit of instructions next to each line unlike the actual 7203 which I'm using at the moment as a reference so I can reply.

Having the same issue. After spending 4 hours one the phone with two "experts" who had me attempting to resolve the concern by trial and error, the error message remains. The most recent conversation had the "expert" state that Macs are not compatible with Turbotax. Really????? It is apparently a systemic concern and the ongoing processing issue without any proactive remedial action by Turbotax is indicative of the value they place on their clients.

Do not enter any information below in Section 3 as TT recommends, eventually resulting in the ERROR message and the inability to process. Further, TT experts were perplexed with the issue, internal escalation provided no useful support for Form 7203. Resulting, an inordinate amount of time was spent going through "hunt and peck" trial and error recommendations that provided no resolution.

I am using TurboTax Premier to do my taxes for 2022. I have a K-1 from my S-Corp, and TurboTax is telling me I need to fill out form 7023 for this K-1, a form I have never had to fill out before. I have had a few different S-Corps going back about 10 years and always do my own taxes (with software, but not always TurboTax).

My K1 has code "D" for line 16 with a positive dollar figure (not a loss). Again, my K-1 from 2021 has no value in this box as I did not take distributions. Looking back at older K-1s, I see that I normally had a code D and a (positive) dollar value.

I've searched reddit, the TT forums, and google in general, and I am unable to find anything definitive that says I need to fill out this form. It appears this form was new in 2021, which would explain why I never saw it for past S-Corp filings (pre-2020).

The form itself states that it should be used to when an individual: received a non-dividend distribution from an S-Corp. I also can't find anything definitive that says whether my distribution was a dividend or non-dividend distribution.

You need to file this form to track your basis in your S-Corp. Your K-1 said that your basis has changed (line 16), so you need to show the IRS what your new basis now is. If the distribution exceeds your basis, it will be treated as capital gains to the extent that it exceeds.

Not a tax pro by any means, but, in general, if you received bonafide distributions (not dividends - these are generally two different things when dealing with s-corps) from your s-corp, you need to file Form 7203.

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