Arkansas Administrative Code
Agency 006 - Department of Finance and Administration
Division 05 - Division of Revenues
Regulation 1997-4 - Comprehensive Individual Income Tax Regulations
Rule 26-51-409 - FEDERAL SUBCHAPTER S ADOPTED
Rule 3.26-51-409(c)(1) - S Corporation Shareholder Basis

Universal Citation: AR Admin Rules 3.26-51-409(c)(1)

Current through Register Vol. 49, No. 9, September, 2024

An S corporation shareholder's basis is significant because:

(1) distributions in excess of his basis may result in gain to the shareholder; and

(2) the shareholder can deduct his pro rata share of the corporation's losses only to the extent of his adjusted basis in the S corporation's stock and debt.

The adjusted basis of the shareholder's stock for purposes of computing the limitation on the amount of the S corporation's losses he can deduct (the loss limitation) is computed after the basis is reduced by the year's nontaxable distributions made to the shareholder. IRC Sec. 1366(d).

The adjusted basis of the shareholder's stock for determining the tax effects of the S corporation distributions to him is determined by increasing the basis for his share of the S corporation's income items for the year, but without decreasing the basis for his share of the S corporation's losses for the year. IRC Sec. 1368.

Disclaimer: These regulations may not be the most recent version. Arkansas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.