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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 3179
Experience:  IRS licensed Enrolled Agent and tax instructor
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Does a loss in a sub S Corp flow through to a 1040? The loss

Customer Question

Hi pearl
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: does a loss in a sub S Corp flow through to a 1040?
JA: Is there anything else the Accountant should be aware of?
Customer: The loss in the subS is created by the contributions to the Defined Benefit plan. Will that loss create lower taxes for the couples 1040 taxes?
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

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:

Expert:  emc011075 replied 1 year ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?