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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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regarding my prior question... my bookkeeper also thinks that

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regarding my prior question... my bookkeeper also thinks that I take the whole loss of 9292. Our company CPA provided me with a shareholder basis worksheet and computed that my basis is 1527. Based on your answer and a quick review of the IRS Document, it might appear that I can only limit my loss to 1527. My bookkeepers explanation to me was that since I am active and not passive, I can take the whole loss now. What is your opinion, please?



There are two levels of tests for an S corporation shareholder. The first test is the At Risk Limitations, Form 6198. With the information provided, your loss for At Risk Limitation purposes is $1,527. The second test is whether your investment is passive or active. If you were a passive investor, your loss may be limited to $ - 0 -. Because you are an active investor, you are allowed to claim $1,527 of losses. I have provided links to IRS Publication 925 that explains passive loss rules, and at risk limitation rules. I have also provided links to Form 6198 and instructions.




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