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We want to bring to your attention new compliance requirements from the IRS for S-Corporation shareholders. The IRS will now begin to audit shareholder basis statements. In 2020, they will begin to send audit letters to all shareholders who do not attach a basis statement to their personal tax return.

What is a Basis?

Basis is a complicated subject and at Storen we work very hard every year to provide accurate basis statements to the IRS for our clients. In very simple terms, Basis is the Net profit (loss) of your business less any money that you or another shareholder has pulled from a company for personal use plus some additional items that may be added to or subtracted from your basis. Basis is a continuous amount that is recalculated every year with the tax return.

What is required?

In order for us to prepare your S-Corporation tax return in a compliant manner, this will now require the following from you as an S-Corp owner:

  • An updated and accurate Balance Sheet
  • Shareholder distributions for the Year
  • Shareholder Debt Basis Statements
  • Stock Basis Statements

For those who choose to use Storen for their accounting and business consulting needs, we will continue to prepare your basis statement for you.

We understand also some of you choose to employ a bookkeeper to meet those accounting needs. We ask that you pass this information of these requested statements along to the bookkeeper so that they can provide them to us when we do your return in the next three months. If your bookkeeper is unsure in how to create these financial statements accurately we are here ready to assist you in this new compliance requirement thru a service engagement. Please call us to find out more details about this engagement.

Storen is here to help each of you remain compliant and current with IRS regulations. We look forward to providing future services for you in the year to come. Have questions? Give us a call now! 


Blog by Jason P. Bailey, CPA – Business Services Manager, Tax Professional

Learn more about Jason and the rest of the Storen Financial team here.