Wipfli logo

Bank on Wipfli - Blog and Podcast


Calculating Basis

Dec 16, 2019
Financial Institutions

By Meghan Gardner 

I was born in Florida, but I’ve lived in Minnesota most of my life (or at least as long as I’ve been old enough to drive). Through high school and college and since I started my career, I’ve driven small-sized sedans with front wheel drive. Although I like to think that I’ve mastered winter driving in Minnesota, I’ve always dreamed of having an all-wheel-drive vehicle. Finally, my dream was fulfilled this year!

On the day after Thanksgiving I bought a brand new AWD SUV. Since then, driving in the snow has been a breeze; however, the nitty gritty of car buying is the negotiating that happens with the sales associates and financing department. Since I traded in my old vehicle, the appraiser applied a standard trade-in credit based on the model, mileage and condition of my used vehicle. As I contemplated the trade-in credit, I couldn’t help but think … wouldn’t it be great if I could hand them a workup of my cost basis and be given credit for that amount?

My cost basis would have included the original purchase price, plus any repairs and aftermarket additions (yes, I had to install a remote start — it’s Minnesota after all). Thinking back to when I bought my old car and about all I’d put into it since, I couldn’t help but think that it would be a daunting task to calculate my basis today. Needless to say, the car dealership really didn’t care what I had invested in my used vehicle.

On the other hand, when it comes to the IRS, they care deeply about how much you have invested in your business. This is especially true for S-corporation shareholders who own bank stock. Looking forward, individual S-corporation shareholders will need to report their tax basis relating to any K-1 they receive on which they report a loss, receive distributions, or sell shares. This new requirement will apply to most S-corporation bank shareholders.

This is also a daunting task. Looking back to when the original shares were purchased and at all the activity that has happened since can certainly be a lot to comprehend. Your Wipfli advisor is here to help you with that analysis, whether at the entity level or the individual level. Wipfli can help you to determine what information is needed to calculate your tax basis, or Wipfli can set up tax basis schedules for you. Reach out today for more information. 


Wipfli logo square

Wipfli Editorial Team

Bank on Wipfli blog
Subscribe to Bank on Wipfli - Blog and Podcast

Video: Benefits of Co-Sourcing Your Internal Audit Plan
You don’t have to stress about making sure your internal audit plan is completed on time. Together, we work with you to identify risks, update processes and finalize your plan. Reinforce your team with the support you need to complete your annual internal audit plan with confidence.