| Does an S Corp's owners loan guarantees increase the owners deductible losses?
Does an S Corp's owners loan guarantees increase the owners deductible losses? Well, not any more! The Tax court recently announced that the "the guarantees do not increase an S Corporations owner's deductible losses!"
An S Corporations owners can deduct losses only up to the extent of their investment in the firm, including any advances made. The Tax Court held that "guaranteeing a bank loan counts only when the shareholder makes good on it."
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