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

Name: Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not reduce loan basis.
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When an S corporation passes through losses to its shareholders, their loan basis in the entity is reduced by the amount of the loss. However, distributions from the S corporation do not reduce the loan basis.

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