S Corporation? Check your basis!

Typically, stock basis in an S corporation begins with the capital contribution you make to get the company started. At the end of each taxable year, your stock basis is adjusted to reflect your business’s operating results. After your stock basis reaches zero, you may be able to deduct additional losses, up to the extent of your debt basis. However, once your stock and debt basis are both reduced to zero, losses incurred are suspended, and you get no current tax benefit. Contact us if you’re in this situation. We can provide a solution and guide you through the rules.