Shareholder Basis

[theresa d]

if a shareholder's loss per the k-1 from an s corp is limited due to basis restrictions, do i just show the allowable loss on schedule E, or do i show the loss per the k-1 and a reduction for basis limitation?

also if the number of shareholders has changed in an s corp (from 2 to 1) is any explanation required in the 1120s?

thanks for any help

[JG EA]

Allowable loss

Just show the allowable loss. Keep a basis worksheet. Keep records of the unallowed loss.
One year I assumed that, since there was a gain I could do the basis later in the summer. Well, when I went to do it later in the summer I realized the carryover loss from the previous year was not used. Yikes. So, keep good records, notes on the computer or something.

[theresa d]

thanks jg

for the timely response