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Old 01-21-2007, 12:33 PM
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Basis in S corporation and its importance!

Dear TaxGuru,

I dont understand why the basis is a big issue for S corporations? What is the significance and how does limit my ability to deduct my S Corporation losses?



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Old 01-21-2007, 08:27 PM
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Dear Dwhite,

The amount of shareholder basis is a big issue for S Corporations because this is the amount that restricts the deductibility of pass through losses ( K-1 Losses) at the shareholder level.

In other words, generally, any losses are deductible only to the extent of shareholder Basis



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