Pass-through S corporation losses can reduce the basis in a shareholder's loan to the entity, but distributions do not reduce loan basis.

Name: Pass-through S corporation losses can reduce the basis in a shareholder's loan to the entity, but distributions do not reduce loan basis.
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S corporation losses passed through to the shareholder can reduce the basis in a shareholder's loan to the entity, but distributions to the shareholder do not reduce the loan basis; they reduce the stock basis first.

Pass-Through S Corporation Losses Can Reduce the Basis in a Shareholder's