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How to complete Form 7203 in ProSeries

by Intuit Updated 3 months ago

How to complete Form 7203 in ProSeries

Before you start:

  • New starting in tax year 2023: The 7203 is automatically included in the e-filed return and no longer needs to be added as a PDF attachment.
    • For tax year 2021 and 2022: This form isn't supported in the e-file schema for electronically filed returns and must be manually attached as a PDF attachment. See here for details.
      • When you add the PDF attachment, make sure the Type of Form 7203.
  • The allowable losses on the 7203 won't automatically flow to the Schedule K-1 Worksheet and will need to be manually entered.
  • The 7203 isn't required on the 1120S return and needs to be completed on the 1040 return by the shareholders. Who must file: Form 7203 is filed by shareholders who:
    • Are claiming a deduction for their share of an aggregate loss from an S corporation (including an aggregate loss not allowed last year because of basis limitations),
    • Received a non-dividend distribution from an S corporation,
    • Disposed of stock in an S corporation (whether or not gain is recognized); or
    • Received a loan repayment from an S corporation
  • If the shareholder had multiple Stock Blocks in the S-Corporation, additional copies of Form 7203 would need to be manually completed and attached for each additional Stock Block.

Step 1 - Complete the 7203 in the individual return:

  1. Open the Individual return.
  2. Press F6 to bring up Open Forms.
  3. Type S to highlight K-1 S Corp and click OK.
  4. Select the K-1 you need the 7203 for.
  5. Scroll down to Part II - Information About the Shareholder.
  6. Select the QuickZoom to Form 7203 for stock and basis limitations.
  7. Complete Part I to show and calculate the Shareholders Stock Basis.
  8. Complete Part II to show and calculate the Shareholders Debt Basis.
  9. In Part III enter any current year losses and deductions on line 35-46 column (a).
  10. In Part III enter any basis carryover losses and deductions on line 35-46 column (a).
  11. You should now have the calculations required to enter the Schedule K-1.

Step 2 - Complete the Schedule K-1 Worksheet in the individual return:

  1. Go back to the Schedule K-1 worksheet for the Shareholder.
  2. Scroll down to Part III - Shareholders Share of Current Year Income, Deductions, Credits, Other Items.
  3. Using the amounts from the 7203 Part III columns C and D enter the allowable losses on the Schedule K-1 worksheet for the shareholder.
    • Amounts on the 7203 Part III column E will transfer to next years return.
  4. Enter any additional items from the Schedule K-1 received that we're not limited by the 7203.
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