2020 Return done by prior accountant artificially increased stock basis equal to PPP Loan but did NOT recognized as tax exempt income in 2020 (left on Schedule L as liability). Other Adjustment to basis entered to increase basis. Subsequently allowing Shareholder to fully absorb current year loss/distributions and resulting in $0 ending basis.
Now in 2021, PPP loan forgiven and recognized as tax exempt income increasing basis with an operating loss. Other adjustment entered to reduce stock basis in efforts to reconcile previously claimed basis increase. 1120S Basis schedule reflects suspended loss due to basis limitation (correct) but when it's flowing to the 1040, the Form 7203 is allowing the loss based on current year tax-exempt income and disregarding the other decrease in stock basis. The loss should be suspended until basis is restored. How do I override?
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