S Corp Basis Calculator: Why Your Loan Guarantee Adds $0 to Basis

You signed the guarantee. Did your deduction move? Enter your numbers and see what deducts this year, what is suspended, and what the same signature would have done in a partnership.

Your numbers (your share, this tax year)

What you paid in for stock Cash and property contributed, plus prior-year income less prior losses and distributions. Your opening stock basis.

Money you personally lent the company Documented shareholder loans still outstanding. Your money, from your account, to the corporation.

Company debt you personally guaranteed Bank loans, equipment finance, the lease on the new location. The company is the borrower; you signed.

Paid by you on a guarantee this year Cash you actually paid the lender from a personal account because the company could not.

Distributions you took this year Cash or property out to you, not salary.

This year's loss allocated to you Your share of the ordinary loss on the K-1.

What the loss does

S corporation

Stock basis after distributions–

Debt basis (your loans)–

Guarantee adds$0

Paid on guarantee adds–

Total basis–

Deductible this year

–

Suspended, carried forward

–

Same numbers, partnership / LLC

Contributions after distributions–

Your loans to the entity–

Recourse debt you guaranteed–

Total outside basis–

Deductible this year

–

Suspended, carried forward

–

Basis is the first gate, not the only one. At-risk (IRC §465) and passive activity (IRC §469) limits apply after it. Distributions reduce stock basis before losses under the default ordering in Treas. Reg. §1.1367-1(g). This is the arithmetic Form 7203 asks for every year.

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Where this comes from

IRC §1366(d)(1): an S corporation shareholder's loss is limited to adjusted stock basis plus basis in indebtedness of the corporation to the shareholder. §1366(d)(2): the excess is carried forward indefinitely while the stock is held.
Treas. Reg. §1.1366-2(a)(2)(ii) (T.D. 9682, 2014): a shareholder does not obtain debt basis merely by guaranteeing corporate debt. Basis arises only when, and to the extent that, the shareholder actually performs on the guarantee.
Treas. Reg. §1.1366-2(a)(2)(i): debt basis requires bona fide indebtedness running directly from the corporation to the shareholder. The regulation's examples cover back-to-back loans.
IRC §752 and Treas. Reg. §1.752-2: in a partnership, a partner's share of recourse liabilities (the debt the partner bears the economic risk of loss for, including by guarantee) is treated as a contribution of money and increases outside basis.
Estate of Leavitt v. Commissioner, 875 F.2d 420 (4th Cir. 1989); Selfe v. United States, 778 F.2d 769 (11th Cir. 1985); Meruelo v. Commissioner, 923 F.3d 938 (11th Cir. 2019): guarantees and advances from affiliated entities did not give the shareholder basis.
IRS Form 7203, S Corporation Shareholder Stock and Debt Basis Limitations.

This is an estimate built from the numbers you enter and the default basis-ordering rules. It is not tax advice. Real basis depends on your full history of income, losses, distributions and loan documentation, and partnership debt allocation under §752 has rules this page does not model. Confirm your figure with your CPA before relying on it. © GATP Solutions.