U.S.: Reg. 1.1367-1(g): Election for Alternative Ordering Rules for Allocation of Deductions to Shareholder Basis
Internal Revenue Code (IRC) Reg. 1.1367-1(g) explains adjustments to the basis of a shareholder's stock in an S Corporation. This code section applies to shareholder basis, not at-risk basis. IRC Section 1367 allows a shareholder to elect to reduce the shareholder basis by items of loss or deduction before nondeductible noncapital expenses.
UltraTax CS provides this election at the S Corporation (1120S) and Individual (1040) levels. View the following data entry instructions to designate the election at either level. UltraTax CS will proforma this election to the following year.
note
If this election is not designated, UltraTax CS reduces basis by the nondeductible noncapital expenses before reducing the basis by deductible items.
Reg 1.1367-1(g) Election at S Corporation (1120) Level
- ChooseView>Shareholder Information>Shareholder Basis>Suspended Losses.
- Mark theRegulation 1.1367-1(g) electioncheckbox, highlighted below.noteMarking this box will print an election statement automatically with the shareholder package unless theSuppress 1367 election statementfield, beneath the election checkbox, is marked.
Reg 1.1367-1(g) Election at the Individual (1040) Level
- Access Screen SBasis1, in the K1 1065, 1120S folder, for the appropriate K-1 unit(s).
- Mark theRegulation 1.1367-1(g) electioncheckbox. This will automatically print an election statement with the individual return.noteMarking the election checkbox will automatically mark theCalculate Shareholder Basis Worksheetcheckbox.
