An S corporation shareholder needs a basis calculation to evaluate losses and distributions. Contributions, allocated income, losses, and distributions can change stock basis. A qualifying direct loan to the corporation may create debt basis, which is tracked separately.

Basis is only one limitation. At-risk, passive activity, and excess business loss rules can also restrict a deduction. A shareholder guarantee of a business bank loan does not automatically create the same basis as actually lending money directly to the corporation.

Ask for a year-to-year basis schedule rather than trying to reconstruct ownership funding only when a large loss appears. Bank transfers should identify whether they represent stock investment, a shareholder loan, repayment, or a distribution.

Your next steps

• Collect prior basis schedules and Forms 7203.
• Identify contributions, loans, repayments, and distributions.
• Review all applicable loss limitations before filing.

General education, not individualized tax or legal advice. Illustrations use stated assumptions and do not promise a refund or tax saving.