S-Corp. Suspended Losses (Insufficient Basis)

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  • #2941128 Reply
    PackerBacker12
    Participant

    I know when you have a loss for an S-Corp and you don't have sufficient basis, the loss gets suspended until you have enough basis to absorb the loss in future years. I was under the impression that if it's the S-Corp's final tax year, all the losses that were suspended can be deducted, even if you don't have any basis to cover the loss. However, my boss told me that even if it's a final tax year for the S-Corp, you can't deduct the losses that were suspended from prior years if you don't have basis, even if it's a final year. Can someone please clarify because I can't find anything on the internet.

    #2942328 Reply
    Jenny
    Participant

    Your boss is correct. Taxpayer cannot take losses that they do not have tax basis in.
    Perhaps this article can help.
    https://www.thetaxadviser.com/issues/2019/aug/deducting-losses-scorporation-terminates.html

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