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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
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Experience:  Extensive Experience with Tax, Financial & Estate Issues
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I have an 1120S company, it lost about 10K in 2011. Can I deduct

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I have an 1120S company, it lost about 10K in 2011. Can I deduct that loss from my personal/individual taxes?

Stephen E. Grizey :

Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.

Stephen E. Grizey :

As long as you have sufficient tax basis (remaining investment of capital and/or loans) yes, you would be able to deduct the loss on page 2 of Schedule E.

Customer:

I thought so because in the past with my other company that I just closed, I was able to deduct my business losses from my personal taxes. When I went to pick up my taxes the secretary said the accountant is out of town on vacation and he didn't provide a K1 or anything to deduct the 1120S corp losses. I thought oh crap I lost 10K I thought I would get a refund, not owe taxes.

Stephen E. Grizey :

What taxes did you pick up? The 1120S?

Customer:

I had them complete my 1120S (filed extensions for both) and my persona

Customer:

The secretary said there are no deductions from a business loss for an 1120S and told me to essentially get lost

Customer:

I was a little upset

Stephen E. Grizey :

Is this accountant a CPA?

Stephen E. Grizey :

So, did you pick up your 1120S & your personal return?

Customer:

Yes the accountant is a CPA and I left the taxes there and asked to speak with the accountant. They told me to come back on Aug 6th when he is done vacationing

Customer:

I said I will not pay until these are done properly

Customer:

their response was to send me the bills by mail instead

Customer:

I am not pleased that's for sure

Stephen E. Grizey :

So you don't have the taxes with you now?

Customer:

no

Customer:

I do not, they remain at their office, and will not be returned to me unless I pay

Customer:

but they are not done properly as far as I know from experience

Stephen E. Grizey :

Don't assume the taxes are done incorrectly. Wait until you speak with the CPA.

Customer:

understood and good advice, but I am a little surprised

Stephen E. Grizey :

The K-1 from the 1120S is not filed with your personal return, so the 1120S loss may be on page 2 of the Schedule E of the form 1040.

Customer:

I prefer to speak with CPAs and not secretaries as I am a serious professional. Anyway, thank you for your help and I will keep in mind to ask where it is and how it is being counted

Stephen E. Grizey :

If he/she is a CPA & is doing both returns, it would be very unusual for this particular error to be made. It is a pretty basic thing. Now there very well may be a reason why the loss can't be deducted & if that were to be the case, the CPA should be able to explain it to you.

Customer:

agreed, I hope he does/will.

Stephen E. Grizey :

It is only 5 days until he returns; so don't be too concerned until he gets back; if its wrong (we all make mistakes) he should fix it.

Stephen E. Grizey :

Please remember to rate my response in order that I can get credit for my work.

Stephen E. Grizey :

I'm betting it is correct, one way or another.

Customer:

Stephen, I am providing you with an excellent service rating, thank you again for your time.

Stephen G. and other Tax Specialists are ready to help you
Jon:

I just thought I'd drop you a note to thank you for my excellent rating & to ask how you made out with your tax returns. I'm curious as to whether the returns were correct and/or if your CPA was able to explain things to your satisfaction?

Stephen E. Grizey, CPA/PFS (retired)

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