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They can audit the S-Corps and anything else they want without formally "declaring" an audit on the corporations. In fact, it would be impossible to do an audit of your personal returns without doing some type of examination of your S-Corp losses as they are reflected on your personal returns. You may find that they will have a checklist to follow just to make sure the S-Corps are filing everything they are required to file, or they may delve into the figures because of the losses reflected on your personal return.
Okay thank you.
Don't be surprised if they take a look at your 2009 and 2011 returns also; this is a common situation. Of course the normal statute of limitations on 2009 expires 3 years from when your 2009 tax return was filed in 2010 or April 15, 2010 whichever is later.
Whey you say take a look at do you mean they will just want to see the returns or run a full audit on those as well?
Okay I think I did what you asked.