Join the waitlist

S Corporation Stock and Debt Basis Calculator (Section 1367)

Is this entity in good shape, or are there warning signs?

Ending stock basis in the regulation order, gain on distributions above basis, loss allowed, suspended loss and debt basis.

  • Runs in your browser
  • Nothing stored or sent
  • Free, no sign-up
Your figures
Example figuresIllustrative only. Type over them with your own.
Ending stock basis
$0
Stock basis after the year, floor of zero
Gain on distributions above basis (capital gain)
$0
Section 1368(b)(2) when there is no accumulated E&P
Loss allowed this year
$29,000
Drawn to one scale
Ending stock basis$0
Gain on distributions above basis (capital gain)$0
Loss allowed this year$29,000
Loss suspended$6,000
Ending debt basis$0
Debt basis restored this year$0
All results
MeasureResult
Ending stock basis$0
Gain on distributions above basis (capital gain)
Section 1368(b)(2) when there is no accumulated E&P
$0
Loss allowed this year$29,000
Loss suspended$6,000
Ending debt basis$0
Debt basis restored this year$0
How this was worked out
Work shownrecomputed as you type
Restoration = min(prior debt basis reduction, max(0, increases - decreases))
Stock basis = beginning + income + tax-exempt income - restoration
Then reduce, in order: distributions, nondeductible expenses, losses (never below zero)
Distribution above basis = capital gain; nondeductible expenses and losses above stock basis reduce debt basis; loss left after that is suspended

Illustrative arithmetic on the figures you enter. Check the result against your firm's methodology before relying on it.

The formulas

  • Restoration = min(prior debt basis reduction, max(0, increases - decreases))
  • Stock basis = beginning + income + tax-exempt income - restoration
  • Then reduce, in order: distributions, nondeductible expenses, losses (never below zero)
  • Distribution above basis = capital gain; nondeductible expenses and losses above stock basis reduce debt basis; loss left after that is suspended

How it works

Section 1367 adds income items to stock basis and subtracts distributions, losses and nondeductible expenses, never below zero. The regulations set the order: increases first, then distributions, then nondeductible expenses, then losses and deductions. That order is why a distribution can be tax free in a year with a large loss.

Losses and nondeductible expenses that exceed stock basis reduce the shareholder basis in loans made to the corporation (section 1367(b)(2)(A)), and loss left over is suspended. Distributions never reduce debt basis. In later years a net increase, which is income items less all decreases including distributions, restores debt basis before it increases stock basis. This tool assumes no accumulated earnings and profits and skips the elective ordering rule, oil and gas depletion and charitable property.

Illustrative figures only. Check the result against your firm's methodology before relying on it.

Common questions

What is debt basis?

The shareholder basis in corporate debt owed to the shareholder. Section 1367(b)(2) reduces it when losses exceed stock basis.

What if distributions exceed basis?

The excess is treated as gain from the sale or exchange of property, which is capital gain when the stock is a capital asset.

What happens to a suspended loss?

It carries forward and is allowed when stock or debt basis is restored.

Sources

Runs in your browser. The figures you type are not sent to CORAA or stored. Check the result against your firm's methodology before relying on it.

Related audit calculators

CalculatorPartnership Outside Basis Calculator (Sections 705 and 704(d))Partner basis after income, distributions and losses, gain on cash distributions above basis, loss allowed and loss suspended.CalculatorS Corporation Built-In Gains Tax Calculator (Section 1374)Net recognized built-in gain after the taxable income and NUBIG limits, the C corporation NOL offset and the 21 percent tax.CalculatorS Corporation Excess Net Passive Income Tax Calculator (Section 1375)Excess net passive income, the 25 percent of gross receipts test and the 21 percent tax for an S corporation with accumulated earnings and profits.
For US CPA firms

Join the CORAA waitlist

CORAA AI drafts audit working papers from your client’s QuickBooks books and does the first pass: lead schedules, tie-out, memos, draft notes and letters. CORAA Network reviewers clear every finding. Your firm reviews and signs.

  • First audit free, so you can judge the quality on a real file
  • Flat fee by entity size; messy books included
  • We work only with CPA firms, never their clients
See how it works →

* required