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I was just talking to you about a CPA is there one I can…

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Hi i was just...

Hi i was just talking to you about a CPA is there one I can talk to now

Accountant's Assistant: The Expert will know how to help. Please tell me more, so we can help you best.

I already did, I need to talk to someone about net operating loss in an S-corp and estimating a refund (carryback if possible)

Accountant's Assistant: Is there anything else important you think the Expert should know?

No they should hopefully be a CPA

Submitted: 11 months ago.Category: Tax
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9/21/2017
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
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Satisfied Customers: 2,442
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Hi, my name is Mark. I will be happy to help you with your questions. I am a CPA. It sounds like you have a few questions regarding a S-Corporation.

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Customer reply replied 11 months ago
hi yes, my CPA is being very slow and I need some guidance on what I can expect
Customer reply replied 11 months ago
my company, a S-corp, paid taxes in 2015, and we had a loss in 2016. I'm trying to figure out, generally, what I might be able to expect in terms of a carryback refund based on the numbers I have. we have a few partners so I know there are caveats, but i'd like to know generally what I might expect based on my particular situation and ownership situation and what I paid in
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

I apologize I was tied up on the phone.

With a S-Corporation the amount of loss would be limited to each shareholders basis. To be able to claim a loss there need to be at risk.

Unless their is a basis issue or passive activity issue the loss is usually reported on the 1040. If the loss is significant it may create a Net Operating Loss for the individual and this would be carried forward to the next year.

Does the S-Corporation have any liabilities?

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Customer reply replied 11 months ago
The S corporation has a lost in 2016 of over 600k, while in 2015 we paid a total of 215k in tax payments to the IRS as a result of our profits that year (we also paid other money based on our income as we're paid on payroll, so I could give you that W2 info as well)
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

How many shareholders are there? What were the amounts on the W-2?

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Customer reply replied 11 months ago
5 shareholders
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

Were each shareholders equal shareholders?

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Customer reply replied 11 months ago
2015 Income Taxes Paid
W-2 $80,947.91 $10,985.81
K-1 $157,898.00 $33,333.32
2015 Total $238,845.91 $44,319.13
2016
W-2 $99,429.74 $14,559.46
K-1 -$116,213.00 $0.00
2016 Total -$16,783.26 $14,559.46
Total $222,062.65 $58,878.59 26.51%
Customer reply replied 11 months ago
each has 20%, each shareholder's taxes look very similar to this.
Customer reply replied 11 months ago
first number is ***** income (w2 or k1), second number is ***** taxes paid associated with that income. I'm showing you both 2015 and 2016
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

As long as there is not a basis issue you would claim a majority of the loss in 2016. The $16.783 loss would be a Net Operating Loss. You would be able to carry this loss forward to the next year.

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Customer reply replied 11 months ago
I don't quite understand. Can I carry back? and if so, how would that work. The way I understood it was that if the loss was 116k in 2016, I could deduct that from my taxable income from 2015, so my taxable income in 2015 from the k1 would be 41,685, and then taxes owed for that year would be re-assesed based on that number, rather than the much larger prior number and I'd get a refund of the diffference
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

An S-Corporation is known as a flow through entity. The income or loss flows from the corporation to the individual shareholders and would be reported on their individual returns. This is different from a C-Corporation. With a C-Corporation the loss could be carried back to prior years. In an S-Corporation the loss would flow to the individual returns, and in your example, create a Net Operating Loss. The Net Operating Loss could be carried back two prior years. So if the NOL was created in 2016 the loss would be carried back to 2014 and if there is any excess it would be carried to 2015.

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Customer reply replied 11 months ago
Right, I understand, so what would my adjusted taxable income be in 2015 if I carried back the loss of 2016? I know there are other things to consider here so i'm happy to answer other questions, but I believe I just took the standard deduction and didn't have any complex tax situations
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

You cannot carry a loss back in a S-Corporation. The loss would flow to the shareholders personal return and if a Net Operating Loss is created then this could be carried back. The Net Operating Loss would need to be carried back to 2014 (2 prior years).

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Customer reply replied 11 months ago
right, that's what i'm saying...so what would my reduced tax liability be? And would it apply to 2015 if it completely reduced 2014's burden?
Tax Professional: Mark Taylor, Certified Public Accountant (CPA) replied 11 months ago

Your liability for 2016 would be zero. Your taxable income for 2014 would be reduced by the Net Operating Loss amount. There are potentially other amounts that may increase this or decrease the amount of NOL depending on your tax situation. Assuming that the Net Operating Loss is $16,783, then this would be carried back to 2014. If you income for 2014 was similar to 2014 the amount of refund would be .28 of the $16,783 or $4,699.

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