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Tax Planning/Carry over loss on S corp


QUESTION: My ex didnt sign over all stock in our S corp as required in settlement.  Ive had to K1 him for half the losses each year as legally 50% stock is still in his name.  Will this hurt me in the future if I show profit  personally and have to pay in on my personal return?

ANSWER: Jayne - I don't have enough information presented to give you a definite answer, but let me outline some generalities and hopefully you will get the information you seek.

1. Losses are only deductible up to the basis you have in the stock.  That works for all shareholders.

2. I assume you will be 100% owner at some point?  Is that what you are asking me?  Otherwise, if you have gains, you will also show 50% of the profit if he doesn't sign.

I guess I need more information to understand what you are trying to get at.

---------- FOLLOW-UP ----------

QUESTION: Thanks for your answer.  Its been a legal and accounting nightmare since divorce.  Can you tell me what the basis would be given the following:

1.  We bought the main asset property back in foreclose for $1.00 in the corp name after selling, holding papers and foreclosing.
2.  The bank filed foreclosure on it after refusing to renew a $250g line of credit I couldnt pay off.
3.  I sold the asset before they could foreclose in exchange for buyers paying off said loan as well as same banks cross collateralized loans for a liquor license on a different corp and my homes heloc, they were also foreclosing on and property taxes.  I received nothing.


Jayne - It would be very difficult for me to calculate the basis in your stock.  It is a combination of a variety of things, including your original investment in the company, the gains and losses and any section 179, among other things.

That is your basis in the stock.  What was purchased within the corp has its own basis.

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As an Enrolled Agent, I am fully capable of providing tax advice as it relates to personal and business income taxes. Enrolled Agents are the only Federally licensed tax practitioners and are admitted to practice before all administrative functions of the IRS. My specialty is working with small business owners who file Schedule "C" and helping them to structure their business in such a way as to maximize as many tax advantages as possible. I also enjoy working with individuals who have both routine as well as complex tax situations. I prefer to concentrate on individuals and small business tax planning.


I have a 25 year background in financial services including tax, bookkeeping, insurance, real estate and securities. I was previously the Chief Financial Officer of a local and national franchise organization. I am currently semi-retired, but used to own (in partnership with another EA) an individual and small business financial engineering firm where I work with nearly 2,500 individuals and small business owners in nearly every state and almost every continent, assisting them in all aspects of their tax and financial well-being. I have prepared or reviewed more than 8,000 tax returns in my career.

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