Just need some clarification here as I’m a little confused. Sole S-Corp shareholder who guaranteed a 3rd party loan to the S-Corp. The S-Corp lost $90K this year. I know that only personal loans increase the loan basis. However, the amount is “at risk” per Section 465(b)(2). Thus, the at risk rules would allow the loss or not limit it. Still, the result is that the loss can’t be taken on the personal because the personal guarantee does not increase basis, rather only direct loans. Right? Or, since it is “at risk” does that allow the taking of loss on the personal return.
Any insight much appreciated? Client just came to me today and mentioned that they had this new S-Corp and wanted to get the K-1 soon so as to write off the loss!!! As always, would of helped if they consulted first beforehand.
As always, much thanks for your assistance.
Any insight much appreciated? Client just came to me today and mentioned that they had this new S-Corp and wanted to get the K-1 soon so as to write off the loss!!! As always, would of helped if they consulted first beforehand.
As always, much thanks for your assistance.
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