This fourth installment of my multi-part series on Subchapter S is focused on suspended losses of an S corporation. While the rules seem straightforward, their application can be tricky, especially given legislative changes made in recent years.
Background
In general, S corporation shareholders, like the owners of entities taxed as partnerships, are allocated their share of the entity’s losses for the taxable year. A number of rules, however, may limit the ability of the owners to deduct these losses.