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Need Some Deductions for 2011?
Don't overlook these!
Updated for 2011
Business Structures
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Allocating Losses to S-corporation Shareholders
A loss is allocated to each shareholder on a daily basis. This means, if you sell your stock before year-end, and the corporation ends up with loss for the year, you cannot deduct the entire loss.
You must allocate the loss according to the number of days you owned the stock and your percentage interest in the corporation.
Example:
- You sell all your stock on June 30, 2011.
- You owned a 50% interest from January 1, 2011 through June 30, 2011 (181 days).
- The corporation has a $10,000 loss for the year ending December 31, 2011.
- The daily loss is $27.39726 ($10,000/365).
Your may deduct: $2,479 ($27.39726 x 181 x 50%).
How S-corporation Shareholders Claim a Loss
S-corporation shareholders claim their share of S-corporation losses on Schedule E.
Schedule E:
First, enter the loss reported to you on Schedule K-1, on Schedule E, Part ll.
Carry the loss from Schedule E (the Part V Summary) to page one of Form 1040, Line 17 (put brackets around the negative number).
Next:
Limited Liability Company: What is a Limited Liability Company? Legal Implications of Operating as a Limited Liability Company
Related Links
- What is an S-corporation?
- Legal Status of an S-corporation;
- Tax Year
- Advantages of an S-corporation
- Disadvantages of an S-corporation
- S-corporation Capital Accounts
- Becoming and S-corporation
- Steps to Becoming an S-corporation
- Filing Deadline for Electing S-corporation Status on Form 2553;
- Qualifying for S-corporation Status
- Tax Reporting for an S-corporation
- When an S-corporation May Be Taxed
- State Taxes and S-corporations
- Sole Proprietorship
- Partnership
- C-corporation
- Limited Liability Company (LLC)
Copyright © 2008-2012 Larry Villano. All rights reserved.