S corporation allocated losses to a shareholder not deductible due to the tax basis limitation rules are carried over by the shareholder to future years for potential utilization.

Question

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S corporation losses that are not deductible due to tax basis limitations can be carried over by the shareholder to future years for potential utilization. This is known as a suspended loss and can be used to offset future taxable income from the S corporation or to increase the shareholder's tax basis in the corporation.

S Corporation Allocated Losses to a Shareholder Not Deductible Due