Discussion Archives:Get a Grip on At Risk and S Corp Losses

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Discussion Forum Index --> Advanced Tax Questions --> Get a Grip on At Risk and S Corp Losses


Discussion Forum Index --> Tax Questions --> Get a Grip on At Risk and S Corp Losses

CPALOG (talk|edits) said:

14 October 2007
S Corp has one shareholder/ee. S Corp is a partner in a partnership.

P passes to S $20,000 ord income, $11,000 of Gtd Payments(Owner's Health Ins), $11,000 of Other Deductions(Owner's Health Ins). S portion of P recourse debt=$370,166(unsure if this is even relevant). S has no other income. S generates a W-2 to S/H / EE for $100,000. S K-1 and Basis.... S Ord Loss ($80,000), S Other Inc 11,000, S Other Ded 11,000-(flow thru of Owner's Health Ins). S owes the S/H $20,000. Stock Basis EOY = 0. Loan Basis used to deduct losses $20,000. Thus loan basis is zero. Suspended Losses = $60,000. How does at risk play in this???? 1040 Software is showing only $500 of loss rather than $20,000 due to at risk limitations? Should the S/H Loan of $20,000 increase the at risk amount? Could the S Corps portion of the partnership's recourse liab play into this? Is the whole thing just messed up? Thanks in advance for comments.

Kevinh5 (talk|edits) said:

14 October 2007
how can P pay the health insurance of the partner who is an S corp? I've seen some sick ones, but...

CPALOG (talk|edits) said:

14 October 2007
Agreed, it would be cleaner for the S Corps to pay the health insurance. However, they just do not want to do that so I run it through as Gtd Pmts and Other Deductions. Tax wise they end up in the same place.

Kevinh5 (talk|edits) said:

14 October 2007
loan from shareholder would increase at-risk basis, but it sounds like it has already been used against prior losses, as the basis of the loan is 0

CPALOG (talk|edits) said:

14 October 2007
Loan basis is zero because the $20,000 S/H loan to the S Corp was used up with current year losses. I was unsure if the $20,000 of cash to the business also increased the at risk amount.

So, from what you are saying. If.... The beginning of year at risk amount is $500. Then the increase to at risk for the current year includes the $20,000 loan from the S/H. So, the at risk available for current year losses is $20,500. (Looks like I am a little off with the $500 between loan basis and at risk-- probably due to common stock).

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