Welcome Guest. Register Now!  



Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 01-28-2007, 09:42 PM
Junior Member
 
Join Date: Jan 2007
Posts: 16
Impact of net operating losses carryover when I convert to a S Corporation?

Dear Taxguru,

Wow! I can't believe the site! I was here only a week or so ago, and I am impressed with the progress on this site!!! WELL DONE GUYS!!

A technical question for you, what happened to my net operating losses carry over in my C corporation, after I converted to an S corporation??? I am hoping to be able to use them this year to offset my profit from my S corporation!

Looking forward to hearing from you.

Thanks.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 01-29-2007, 10:52 AM
TaxGuru's Avatar
Tax Guru
 
Join Date: Jan 2007
Location: New Jersey, USA
Posts: 2,417
Blog Entries: 3
Character of C Corporation Losses after S corporation conversion.

Unfortunately, the immediate impact of these losses is that they become suspended!

Yes, it sounds nasty, but it is true, these losses are not deductable nor do they pass through to the individual owners of an S Corporations through the K-1.

Perhaps, you made a hasty move to Convert to an S corporation w/o consideration of the impact of the NOL's. I have seen this time and again where folks are eager to convert to an S Corporation, but forget they have significant prior year losses that can be absorbed by the C corporation on being profitable.

The treatment of these losses is a very complicated subject, suffice to say these losses eventually raise the basis of the shareholder, and in event of sale of the company may help offset the capital gains.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

Last edited by TaxGuru : 02-22-2007 at 05:49 PM.


Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.