A shareholder's deduction for ordinary losses and separately stated items cannot exceed his basis for the S corporation stock plus the debt basis for the shareholder loans made to the corporation and corporate-level liabilities personally guaranteed by the shareholder.

Question

Quizplus · Accepted Answer

A shareholder's deduction for ordinary losses and separately stated items is limited to the sum of their stock basis and debt basis for loans made directly to the S corporation, but it does not include corporate-level liabilities personally guaranteed by the shareholder.

A Shareholder's Deduction for Ordinary Losses and Separately Stated Items