REV-998: Shareholder Tax Basis in PA S Corporation Stock Worksheet (REV-998) (Revision 2012-08)
Pennsylvania · Pennsylvania DOR · Used for tax years 2024, 2025, 2026
REV-998 is a worksheet for calculating a shareholder’s tax basis in Pennsylvania S corporation stock and debt. It tracks beginning balances and adjustments for contributions, loans, income, distributions, losses, credits and other items to calculate year-end balances.
What you'll need
Have these forms and records available to complete the worksheet:
- PA RK-1 or NRK-1: For your share of income, gains and losses.
- Prior-year basis records: Your ending stock and debt basis, or your initial basis in S corporation stock.
- Corporation and shareholder details: The corporation’s name and EIN, your name and SSN, and the tax year.
- Stock and loan records: Capital contributions, stock purchases, new shareholder loans, principal repayments, and sales or other dispositions of stock.
- Distribution and expense records: Accumulated Adjustments Account (AAA) distributions, distributions in excess of AAA, PA business credits and non-deductible expenses.
- Loss and depreciation details: Losses used to offset PA-40 income in the same class and your share of straight-line depreciation.
Common mistakes
- Putting loan repayments on the wrong line. Use Line 4b only if debt basis has not been reduced in previous years by pass-through losses. If it has, use Line 21b. Repayment of reduced-basis loans triggers gain recognition.
- Missing taxable distributions. Distributions in excess of basis are taxable to residents and should be reported on PA-40 Schedule D, Line 9.
- Skipping a basis reduction because a loss gave no tax benefit. The worksheet says you must still reduce basis by your share of straight-line depreciation. A partial benefit requires a reduction for the loss used plus a portion of that depreciation.
- Entering negative ending balances. Stock and debt basis balances on Lines 22a and 22b cannot be less than zero.
- Including the wrong income on certain lines. Interest and dividend income on Lines 5a and 5b are for residents only. Line 5f excludes gross compensation.
Questions people ask
What does REV-998 track?
The worksheet tracks a shareholder’s stock basis and debt basis in a PA S corporation, from beginning-of-year balances through adjustments to end-of-year balances.
What should I enter on Lines 1 and 2?
Enter your prior-year ending stock and debt basis, or your initial basis in S corporation stock.
Where do the income and gain amounts come from?
The worksheet identifies PA RK-1 or NRK-1 as the source for income and gain adjustments. Add Lines 5a through 5g to get the total on Line 5.
How does a loss affect basis if I received only a partial tax benefit?
Reduce basis by the loss you used, plus a portion of your share of straight-line depreciation. Calculate that portion by dividing the unused loss by the total loss, then multiplying by your share of straight-line depreciation.
Can my ending stock or debt basis be negative?
No. The worksheet states that the end-of-year balances on Lines 22a and 22b must not be less than zero.