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Then you do have income! Yeah, I agree it's the PPP that's the problem, because I can replicate your results.
If you omit the PPP income from the Line 16B Other tax-exempt income field, and override the Current Year Income from S-corp, that seems to get a tolerable presentation. I agree that this is not a particularly desirable course of action or presentation, but it seems to come out okay in the end - no diagnostics, at least.
Edited because I typo'd my Lacerte input:
In the 25 years I've been using Lacerte, I have never had to override the debt basis calculation in the 1040 package. Nor do I have to make any overrides to get it to do it right this year.
Basis worksheet:
K-1 input:
Basis Limitation input:
In Win10, Windows Key + Shift + S opens a screen capture tool. It grays out the screen, you select the area to capture with your mouse, and when you release the mouse it gives you a little "click here to edit and save" option. Click that, click the Save icon, save somewhere you can remember, then use the camera icon at the top of the message input box to upload the image file.
If you have a loss in the current year, how do you have income to restore debt basis? If low basis / no basis debt was repaid, you do have a gain.
Step 1: Enter the repayment into the K-1 input screen:
Step 2: Lacerte calculates the gain on repayment, reports it on Line 12 of Schedule D, and adjusts the basis schedule automatically. READ YOUR DIAGNOSTICS to see that Lacerte assumes that a) there's a written note (so the client gets capital gains treatment) and b) it's long-term. There are references to the relevant Rev Ruls and directions for overriding if Lacerte is assuming wrong.
The "income used to restore debt basis" line doesn't get used, because there's no current-year income from the K-1 itself. (The 1120S basis schedule doesn't have the same presentation as the 1040 basis schedule; that's okay.)
Thanks for the tip! This is a weird year, as there is PPP forgiveness, which flows through as tax-exempt income. Maybe that is my problem. Here are my inputs:
S-Corp K-1 input
S-Corp Basis schedule:
Individual module as imported from S-Corp module:
Individual basis statement:
My thought is that the stock basis should be zero, as opposed to the $10678 (which is the income used to restore debt basis). I did override the beginning debt basis to include the $10678, so that my ending debt basis agreed to the S-Corp module debt basis. Guidance is much appreciated!
Then you do have income! Yeah, I agree it's the PPP that's the problem, because I can replicate your results.
If you omit the PPP income from the Line 16B Other tax-exempt income field, and override the Current Year Income from S-corp, that seems to get a tolerable presentation. I agree that this is not a particularly desirable course of action or presentation, but it seems to come out okay in the end - no diagnostics, at least.
Edited because I typo'd my Lacerte input:
