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Old 03-06-2014, 09:04 PM
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412i plan in Scorp with loss

I have a single officer owned SCorp who has a $22k loss. There is a 412i plan annual contribution of $57K and a Officer salary of $29K.

My question is, can I pass the loss onto the K-1, he has basis, and offset it agains the W2 income from that very Scorp? I'm worried that because the 412i is a defined benefit plan and self employed individuals who contribute to these plans are limited to there income, they have put too much money into the plan.

It's too late to recharacterize the salary, all 941's and W2' for 2013 have been filed.

Suggestions are helpful.

Thanks
Bianca



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Old 03-07-2014, 12:00 AM
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Quote:
Originally Posted by biancas80 View Post
I have a single officer owned SCorp who has a $22k loss. There is a 412i plan annual contribution of $57K and a Officer salary of $29K.

My question is, can I pass the loss onto the K-1, he has basis, and offset it agains the W2 income from that very Scorp? I'm worried that because the 412i is a defined benefit plan and self employed individuals who contribute to these plans are limited to there income, they have put too much money into the plan.



Thanks
Bianca
You can use S-Corp loss to offset other income including your W-2 income. However, you can only deduct a loss the the extent of your stock/loan basis. For example, contributions + taxable income - taxable loss – distributions. This is a bit of a simplification but it works for most situations.Assume that you put in $1K of your own money to get your company started and then lost $1k the first and made $4K net income for the next 3 and no loan bais thenYour basis is $12k (1k – 1k + 4k + 4k + 4k).Given these assumptions you can use any S-Corp losses up to $12k in the coming years.



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