{"id":145,"date":"2018-11-29T20:06:42","date_gmt":"2018-11-30T01:06:42","guid":{"rendered":"http:\/\/www.heywardcpa.com\/blog\/?p=145"},"modified":"2023-12-03T22:17:56","modified_gmt":"2023-12-04T03:17:56","slug":"an-s-corporation-loss-equals-a-personal-tax-deduction","status":"publish","type":"post","link":"https:\/\/www.heywardcpa.com\/blog\/2018\/11\/29\/an-s-corporation-loss-equals-a-personal-tax-deduction\/","title":{"rendered":"Understanding how a S Corporation Loss leads to an Individual Tax Deduction."},"content":{"rendered":"

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Business owners aren\u2019t in business to lose money. So there\u2019s not much to like about a nonprofitable year. For a shareholder in an S corporation, however, a down year can have an upside — the corporate loss may give rise to a personal tax deduction.<\/p>\n

Standing between an S shareholder and the loss deduction is a tricky tax computation known as “adjusted basis.” Under the tax law, a shareholder\u2019s loss deduction is limited to the shareholder\u2019s adjusted basis in his\/her corporate stock and in any debt the company owes the shareholder.<\/p>\n

What is adjusted basis, anyway? Essentially, it\u2019s a figure that tracks the shareholder\u2019s investment in the company for tax purposes. The basis number changes every year to account for any money flowing between the company and the shareholder — distributions, capital contributions, loans, and loan repayments — as well as for the shareholder\u2019s allocated share of corporate income or loss.<\/p>\n

If a net operating loss is anticipated for the year, S shareholders should find out whether they will have enough basis to benefit from the projected loss deduction. If not, it may be possible to increase basis by making a contribution to capital or by loaning the company money before year-end. When you give us a call today, our tax professionals can offer guidance so that the transaction will pass IRS muster.<\/p>\n","protected":false},"excerpt":{"rendered":"

Business owners aren\u2019t in business to lose money. So there\u2019s not much to like about a nonprofitable year. For a shareholder in an S corporation, however, a down year can have an upside — the corporate loss may give rise to a personal tax deduction. Standing between an S shareholder and the loss deduction is … Read more<\/a><\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[95],"tags":[50],"class_list":["post-145","post","type-post","status-publish","format-standard","hentry","category-tax-business","tag-s-corporation"],"modified_by":"James E. Heyward CPA","_links":{"self":[{"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/posts\/145","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/comments?post=145"}],"version-history":[{"count":2,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/posts\/145\/revisions"}],"predecessor-version":[{"id":1786,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/posts\/145\/revisions\/1786"}],"wp:attachment":[{"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/media?parent=145"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/categories?post=145"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.heywardcpa.com\/blog\/wp-json\/wp\/v2\/tags?post=145"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}