NTA2320. S Corporations: Red Flags in the Basis Calculation

This session will provide a discussion of how typically S corporation shareholder basis relates to balance sheet equity and the AAA account. By the end of this session, you will be able to: 1. Identify “red flags” in the shareholder basis calculation by comparing the AAA and the balance sheet to the basis calculation. 2. Explain the most common reasons why basis does not equal balance sheet equity for small S corporations with simple situations. 3. Understand how to calculate basis when it was not done correctly in the past. 4. Understand when you may be able to “back into” basis when prior year returns are not readily available, and when you should avoid this method.

Learning Objectives:

• Identify “red flags” in the shareholder basis calculation by comparing the AAA and the balance sheet to the basis calculation.
• Identify the most common reasons why basis does not equal balance sheet equity for small S corporations with simple situations
• Calculate basis when it was not done correctly in the past.
• Identify when you may be able to “back into” basis when prior year returns are not readily available, and when you should avoid this method.