S corp - form 7203 - I'm getting inconsistent answers given 2 situations:
Client has $7,512 of N/D expenses in the current year. Shareholder has stock basis and debt basis. The Shareholder has NOT made the 1.1367-1(g) election to change the ordering rules.
Situation 1: Shareholder has distributions in excess of stock basis and will be taxed on the excess. On page 1 of the 7203, starting with line 7 everything is zero (which makes sense). On page 2 I am expecting line 28 to read $7,512, but it reads zero.
Situation 2: Shareholder's distributions don't exceed his stock basis. He has $839 on line 7 of the 7203. Lacerte is now showing the $7,512 N/D on line 8a and 9, reducing it by the line 7 stock basis and then putting the remaining N/D expenses of $6,673 on line 28 and reducing debt basis.
My understanding of not making the election under 1.1367-1(g) is that any remaining unused N/D expenses after applying them to the current year stock and debt basis calculations will not carryforward. Lacerte's treatment is situation 1 is to not apply the N/D to the debt basis in the current year, but in situation 2 they are.
Am I right or is Lacerte? And, if I am right, how do I get Lacerte to return the correct answer?
