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Yes, Scorp losses flow through to a 1040 and can be deducted to certain extend. It may or may not reduced shareholder's taxes, depending how much of the looses he will be allowed to take.
First, there's basis rule: His losses cannot be more than than his basis in the Scorp.
Second is the at-risk rule: He cannot deduct more losses than he is liable for
Third is the passive loss rule: limited shareholders can only deduct passive losses from other passive income.
You can find more details here: http://bgbc.us/?q=node/300
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