I understand the argument that you made, that is you cannot deduct losses in excess of basis! Ok, I think I am going to have substantial losses in my S corporation, and of course we have substantial assets in the S corporations so getting a line of credit to cover those losses should not be a problem.

Can you please advise me whether the line of credit guaranteed by me of course would allow me to generate the additional basis? If not, can you advise how I can increase my basis in the S corporations to allow deductibility of the losses in my 100% owned S corporation. Thanks a lot..