What is a stock block, and when are multiple 7203 forms required

Question

The IRS form 7203 instructions state that:

When a shareholder has a different basis in different blocks of stock, pass-through items are generally allocated pro rata to all shares, regardless of their different bases. If there is a partial stock sale or partial redemption, you may file more than one Form 7203 and provide a description of what period the form covers.

I am a shareholder in an S-Corporation, and I have purchased stock directly from the company several times (never from other shareholders) at the current valuation of the stock. I have never sold stock, but I have been keeping track of my basis because every year there has been a distribution (except for one year that had a loss).

My question is two-fold:

1. What is a stock block? Since I have purchased multiple "chunks" of shares (one group every year or so) are each of these purchases a different stock block?
2. When do I need to file multiple 7203s? Since I haven't done any selling or redemption of stock do I only need to file one 7203? Should I be keeping track of my basis as a single year-over-year value, or do I need to track separate basis for each stock block?

Answer 1

As far as I know, a block is just a group of identical shares purchased together, at the same price and on the same day for all of them. Thinking of them as a block makes calculations easier; you can just compute the numbers for one share and multiply it appropriately.

You could track that individually for every single share (and fraction of a share, if your broker can handle that), but that's a lot of extra effort and there aren't many good reasons to do so.