6584
The following diagnostic is generating:
S-Corporation #{ScorpNum}: A negative ending basis was computed. Per Internal Revenue Code Section 1368(b)(2), if the S-Corporation has no earnings and profits from when it was a C Corporation, then the distributions that caused the negative basis amount is taxable as a capital gain. The program does not automatically compute this gain. Any gain required to be recognized must be entered into the disposition screen. The amount of gain should also be included as an other current year increase to basis.
Solution:
