Discussion:Prior year unallowed losses from S corporation
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Discussion Forum Index --> Advanced Tax Questions --> Prior year unallowed losses from S corporation
Discussion Forum Index --> Tax Questions --> Prior year unallowed losses from S corporation
| 18 October 2007 | |
| I have a client who is an S corp shareholder with no stock basis. He has prior year loss in excess of basis totaling $40,000. These losses were considered unallowed losses in prior years due to basis limitations. This year is the first year since he became a shareholder that the company produced positive net income. His K-1 for this year shows $10,000 of ordinary business income. Can the $10,000 of business income this year be offset by $10,000 of the $40,000 in suspended losses? Or, because he has no stock basis, must he pay taxes on this $10,000 of income (which was not distributed, in fact is mostly due to a lender writing off a loan to the company) this year?
It would appear the prior loss could be used to offset the income, but because he has no basis, I am not sure. Any assistance would be much appreciated. Thank you. | |
Bushmaster (talk|edits) said: | 18 October 2007 |
| Yes.
No. | |
| 18 October 2007 | |
| Jay, you will also want to take some CPE classes on S corps where they discuss basis rules, since you have clients who need you to know those things. | |
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