Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis.

Question

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This statement is true. Any excess of S corporation losses or deductions over the shareholder's combined stock and debt basis is suspended until there is a subsequent stock or debt basis. This means that shareholders cannot use these losses or deductions to offset other income until they have enough basis to do so.

Any Excess of S Corporation Losses or Deductions Over the Shareholder's