Loss for an S Corporation

[Duane Anderson]

Three shareholders have about a $15,000 loss for 2009 with NO capital contributions...However, each has "peraonally guaranteed" truck loans and credit card balances much greater than this.....So can they each deduct their share of the 2009 loss on their personal return....Thanks, Duane

[BHoffman]

Three shareholders have about a $15,000 loss for 2009 with NO capital contributions...However, each has "peraonally guaranteed" truck loans and credit card balances much greater than this.....So can they each deduct their share of the 2009 loss on their personal return....Thanks, Duane

Hi Duane - you don't mention whether the shareholders have any stock basis, which is different from capital contributions. Is this their first year in operation?

Personal guarantees of loans like the ones you described do not increase debt basis.

Here is a link to an IRS webpage you might find interesting:

http://www.irs.gov/businesses/small/article/0,,id=203101,00.html