An S Corp which I am an employee of and did the tax return for 2020 for the first time. Other outside firms did the return before that.
The company has a book loss of $58,000 for 2020 and a tax loss of $142,000. There was $90,000 of tax exempt income such as PPP Loan Forgiveness, EIDL Grant, and other SBA Loan Forgiveness.
The company started in 1998 and has a negative retained earnings and equity as of 12/31/20. There is one owner who is 100% owner. The company had small losses for 2017, 2018. and 2019. There is a carryforward loss into 2020 of $14,000
On the owners 1040 I don't know what the owners basis is in the S Corp is and I doubt it was tracked by the other companies who did the return. I have a feeling it is $0.
If I put down his basis in the S-Corp is $0 he will be allowed to deduct $7,280 loss and carryover the remaining $135,000 for 2020.
Any input about this? Is my logic on track?
The company has a book loss of $58,000 for 2020 and a tax loss of $142,000. There was $90,000 of tax exempt income such as PPP Loan Forgiveness, EIDL Grant, and other SBA Loan Forgiveness.
The company started in 1998 and has a negative retained earnings and equity as of 12/31/20. There is one owner who is 100% owner. The company had small losses for 2017, 2018. and 2019. There is a carryforward loss into 2020 of $14,000
On the owners 1040 I don't know what the owners basis is in the S Corp is and I doubt it was tracked by the other companies who did the return. I have a feeling it is $0.
If I put down his basis in the S-Corp is $0 he will be allowed to deduct $7,280 loss and carryover the remaining $135,000 for 2020.
Any input about this? Is my logic on track?