P.R. Laws tit. 13, § 30585
(a) General rule. —
(1) Increases in basis. — The basis of each shareholder’s stock in a corporation of individuals shall be increased for any period by the pro rata share of the shareholder in the items of income described in § 30584(a)(1) of this title.
(2) Decreases in basis. — The basis of each shareholder’s stock in a corporation of individuals shall be decreased for any period (but not below zero) by the sum of the following items determined with respect to the shareholder for such period:
(A) Distributions by the corporation which were not includible in the income of the shareholder by reason of § 30586 of this title,
(B) the allowed items of loss and deduction described in § 30584(a)(1) of this title,
(C) the credits § 6013(a) of Title 23, Section 14 of the Investment Capital Funds Act, and the credit of § 30578 of this title, as well as any other similar credit, and
(D) the withholding at the source of §§ 30275 and 30280 of this title.
(E) any expense of the corporation of individuals not deductible in computing its taxable income and not properly chargeable to capital account.
(b) Special rules. —
(1) Income items. — An amount which is required to be included in the gross income of a shareholder and shown on his/her return shall be taken into account under subsection (a)(1) only to the extent such amount is included in the shareholder’s gross income on his/her return, increased or decreased by any adjustment of such amount in a redetermination of the shareholder’s tax liability.
(2) Adjustments in basis of indebtedness. —
(A) Reduction of basis. — If for any taxable year the amounts specified in paragraphs (B) and (E) of subsection (a)(2) exceed the amount which reduces the shareholder’s basis to zero, such excess shall be applied to reduce (but not below zero) the shareholder’s basis in any indebtedness of the corporation of individuals to the shareholder.
(B) Restoration of basis. — If for any taxable year beginning after June 30, 1995, there is a reduction under paragraph (A) in the shareholder’s basis in the indebtedness of a corporation of individuals to a shareholder, any net increase (after the application of clauses (1) and (2) of subsection (a)) for any subsequent taxable year shall be applied to restore such reduction in basis before any of it may be used to increase the shareholder’s basis in the stock of the corporation of individuals.
(3) Coordination with §§ 30125(c)(2) and § 30126 of this title. — This section and § 30584 of this title shall be applied before the application of §§ 30125 and 30126 of this title to any taxable year of the shareholder or the corporation in which the security or debt becomes worthless.
History —Jan. 31, 2011, No. 1, § 1115.05, retroactive to Jan. 1, 2011.