I got an extension for my s-corp filing for 2011 and I'm just about finished. I'm starting my personal taxes and I don't know how to claim my loss from my s-corp. I have an additional income in a part time job that I use to help fund my s-corp, so the business loss is also a personal investment loss. I used to use a schedule C when I was a sole prop, but now that I'm an s-corp, how do I file?

“ I have an additional income in a part time job that I use to help fund my s-corp, so the business loss is also a personal investment loss. I used to use a schedule C when I was a sole prop, but now that I'm an s-corp, how do I file?”------> In very simple terms, the losses that you have apparently incurred in 2011 maybe deductible through your K-1of1120s and 1040 provided you have what is termed "sufficient basis" in the S Corp. Since you are operating an S corp, your basis is the sum of origninal investment, plus net loans made by you to the corp, plus undistributed profits or retained earnings. You, as a sh/EE, advanced money to the S-Corp as a loan by paying for company expenses using your personal funds, cash/ credit card, and submits an expense report to the company for repayment/deduction on your return. Your making loans to your S-Corp may take a tax deduction in the current year for losses in excess of your stock basis including AAA account balance, but only to the extent you have loan basis. Your loan basis, I mean adjusted basis cannot be below zero. However, your loan adjusted basis will often result in a negative number. Then, Any excess "negative basis" is treated as a non-deductible loss. This excess loss is a "suspended loss" and carries over to future years indefinitely. The suspended loss may be deducted in any future tax year during which you have restored your loan basis or stock basis. Just to be clear, the bottom line for you is that if you have already claimed the losses via the K-1s from all the tax years so that your capital /loan or AAA account/basis is zero, then you have no Section 1244 loss(If I assume that you originally purchased the stock may, you claim an ordinary loss on Section 1244 stock, depending on the situation) If however you do have basis, then you can claim Section 1244 only for your initial capital contribution. The rest of the losses would be long term capital gain. SO,you can deduct your original capital investment of Section 1244 stock up to the statutory amount, provided you have not previously written down your basis from NOL deductions. The tax definition of IRC 1244 permits the following maximum loss amount deductible as ordinary loss on any taxable year: 1. Per taxpayer $50,000, or 2. For husband and wife $100,000 filing a joint return.If your S-corp owns Section 1244 stock and incurs a loss on the stock, S-corp shareholders cannot deduct the loss as an ordinary.

S-corp shareholders must deduct the loss on Section 1244 stock, which is owned by the S-corp, as a capital loss.

Capital losses are limited to $3,000 a year.