{"id":3491,"date":"2019-01-25T20:04:52","date_gmt":"2019-01-25T20:04:52","guid":{"rendered":"https:\/\/www.ua-cpas.com\/blog\/?p=3491"},"modified":"2019-01-27T05:51:11","modified_gmt":"2019-01-27T05:51:11","slug":"an-s-corporation-loss-equals-a-personal-tax-deduction","status":"publish","type":"post","link":"https:\/\/www.ua-cpas.com\/blog\/index.php\/2019\/01\/25\/an-s-corporation-loss-equals-a-personal-tax-deduction\/","title":{"rendered":"An S Corporation Loss Equals a Personal Tax Deduction"},"content":{"rendered":"<p>Business owners aren&#8217;t in business to lose money. So there&#8217;s not much to like about a nonprofitable year. For a shareholder in an S corporation, however, a down year can have an upside<\/p>\n<figure id=\"attachment_3498\" aria-describedby=\"caption-attachment-3498\" style=\"width: 262px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-3498\" src=\"https:\/\/www.ua-cpas.com\/blog\/wp-content\/uploads\/2019\/01\/tax-savings2.jpg\" alt=\"\" width=\"262\" height=\"192\" \/><figcaption id=\"caption-attachment-3498\" class=\"wp-caption-text\">Tax Savings<\/figcaption><\/figure>\n<p>&#8211;<strong>&#8211;<span style=\"color: #0000ff;\"> the corporate loss may give rise to a personal tax deduction.<\/span><\/strong><\/p>\n<p>Standing between an S shareholder and the loss deduction is<\/p>\n<p>a tricky tax computation known as &#8220;<span style=\"color: #0000ff;\">adjusted basis<\/span>.&#8221; Under the tax law, a shareholder&#8217;s loss deduction is limited to the shareholder&#8217;s adjusted basis in his\/her corporate stock and in any debt the company owes the shareholder.<\/p>\n<p><strong><span style=\"color: #0000ff;\">What is adjusted basis, anyway<\/span><\/strong>? Essentially, it&#8217;s a figure that tracks the shareholder&#8217;s 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 &#8212; distributions, capital contributions, loans, and loan repayments &#8212; as well as for the shareholder&#8217;s allocated share of corporate income or loss.<\/p>\n<p>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.\u00a0 Our tax professionals can offer guidance so that the transaction will pass IRS muster.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Business owners aren&#8217;t in business to lose money. So there&#8217;s not much to like about a nonprofitable year. For a shareholder in an S corporation, however, a down year can have an upside &#8211;&#8211; the corporate loss may give rise to a personal tax deduction. Standing between an S shareholder and the loss deduction is [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4,22,23],"tags":[220,110],"class_list":{"0":"post-3491","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-small-business-forum","7":"category-tax-tips-for-individuals","8":"category-taxes","9":"tag-corporate-income-taxes","10":"tag-income-tax-planning","11":"entry"},"_links":{"self":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3491","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/comments?post=3491"}],"version-history":[{"count":5,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3491\/revisions"}],"predecessor-version":[{"id":3500,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/posts\/3491\/revisions\/3500"}],"wp:attachment":[{"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/media?parent=3491"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/categories?post=3491"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.ua-cpas.com\/blog\/index.php\/wp-json\/wp\/v2\/tags?post=3491"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}