Where to apply basis limitations

Technical topics regarding tax preparation.
#1
dhcpa  
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4-Feb-2017 1:50pm
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Towson, MD
Have an S corporation medical entity that had an asset sale during 2018, as part of that sale, there was rollover equity into a new entity (a partnership). The existing S corp is now comprised of just a little bit of cash and their ownership in the new partnership. We have finally received the K1 for the partnership and it is presenting with a decent size loss for 2018 and notations that at the partnership level, the tax basis is now negative. My question concerns where a basis limitation is imposed, is it imposed at the S corp entity level and thus there is no pass through of the loss allowed, or is it passed down in full via the S corp K1's and the overall basis is contemplated at the shareholder level. There are three shareholders at the S corp level that have varying amounts of basis, none of which are as much as the loss, so I know there will be a limitation of the loss, just haven't had one pass in this way before.

Any direction or thoughts would be greatly appreciated.


Thanks in advance

DH
 

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