SUSPENDED LOSSES S CORP

Technical topics regarding tax preparation.
#1
Posts:
195
Joined:
21-Feb-2015 9:44am
Location:
College Station, TX
TAXPAYER WAS 100% OWNER OF S CORP. HE SOLD (STOCK SALE) HIS INTEREST IN 2021. HIS FINAL K-1 SHOWS $18,647 IN ORDINARY INCOME. AT THE TIME OF THE SALE, HE HAD $29,133 IN SUSPENDED LOSSES. HIS STOCK BASIS AS OF THE DATE OF THE SALE WAS $53,932 BECAUSE HE HAD $18,647 IN ORDINARY INCOME AND MADE CAPITAL CONTRIBUTIONS IN 2021.

WOULD IT BE CORRECT THAT HE CAN TAKE ALL THE SUSPENDED LOSSES BECAUSE HE HAD STOCK BASIS IN EXCESS OF THE SUSPENDED LOSSES AND THAT HE WOULD SHOW A NET LOSS OF $10,886 (I.E. $29,533 - 18,647) ON HIS SCH E AND 1040?

THANK YOU.
 

#2
Posts:
1017
Joined:
10-Jun-2019 4:20pm
Location:
WESTERN USA
THAT HE WOULD SHOW A NET LOSS OF $10,886 (I.E. $29,533 - 18,647) ON HIS SCH E AND 1040?


No. First you adjust his basis prior to disposition of $35,285 ($53,932-$18,647) by his income +$18,647 and suspended losses -$29,533 $ = $5,752, but not below zero, Reg 1.1367-1(d)(1). Then you determine his gain or loss by comparing the amount of cash received and other property for the sale with his stock basis. S corp stock is a capital asset so gain/loss would be capital gain/loss not Schedule E.
 

#3
Posts:
195
Joined:
21-Feb-2015 9:44am
Location:
College Station, TX
Thank you very much.
 


Return to Taxation



Who is online

Users browsing this forum: Anderly, beardenjv, CoastalCPA, Google [Bot], Google Adsense [Bot], HowardS, JoJoCPA, lckent, MAPCPA60, MilesR, missingdonut, Terry Oraha, UnlicensedTaxPro and 146 guests