Form 7203 Sept 2022 Draft

[Terry D EA]

I just spent two hours in a webinar learning more about this form. I have a fair understanding of its purpose as well as who must file the form. Good information on stock basis and debt basis and the need to re-create if the shareholder is clueless. The webinar was hosted by an Attorney who admitted several things were not tested in court yet as all is too new. One question that I couldn't get answered that hopefully we can discuss here. Yes, I've tried researching this with no definitive answer.

I have an LLC who in 2015 chose to be taxed as an S-Corp. All required forms filed, IRS accepted; etc. Here are my questions:

1. When an LLC chooses to be taxed as an S-Corp, they retain their LLC status correct? They have not established a full corporation correct?

2. LLC's do not or are not permitted to issue stock. Hence the stock basis part of form 7203 calculation. 

3. Should the LLC who elected to be taxed as an S-Corp choose the desired number of shares at the time the election was made to properly track stock basis?

This particular entity doesn't meet the filing requirements for form 7203. But... the attorney in the presentation it would be best practice to fille the form anyway. I can't find anything in the regulations or anywhere else that gives any instructions or exceptions for an LLC taxed as an S-Corp. Applying logic, being tax as an S-Corp means you follow all of the S-Corp rules when filing form 1120-S. I'll welcome all comments and opinions.