Shareholder basis in S corporations is a third big enforcement priority. Owners of S corporations can deduct losses only up to their stock basis and loans that they make to the company. IRS knows that compliance in this area is deficient. IRS is conducting audits in this area. Exams are at the shareholder level. Agents are checking to see whether shareholders are properly tracking their basis. Many S firm owners must now include basis information with their 1040. Starting with 2018 returns, they must check a box on line 28 of Schedule E and attach a basis computation. This requirement applies to those who report a loss, dispose of their stock, or receive a distribution or loan repayment from the company.