Loss Limitation for S Corporations

Description

This course is designed to assist the participant in understanding the interaction of the different rules that may limit the ability of a shraeholder to deduct his/her allocable share of loss from an S corporation, including basis limits, debt rules passive activity loss rules, and at-risk rules.

Highlights

LINK AND INSTRUCTIONS TO COME FROM AES TAX ONE DAY PRIOR TO SESSION

Objectives

After completing this course the participant will be able to:

• Describe the amount of loss that is deductible under the basis rules, the character of the deductible loss, and how to report the K-1 items on a Form 7203.
• Identify when the at-risk rules might apply to limit the loss that is deductible.
• Recognize when the passive loss rules apply, including allocating losses on the Schedule K to trade or business losses, rental real estate losses, and other rental losses.
• Describe the tax effect of using the suspended losses under the basis rules and passive loss rules when a shareholder disposes of his/her interest in the S corporation.
• Discuss the term "post-termination transition period," including converting an S corporation to a C corporation.
• Describe which losses may be used in the post-termination transition period.
• Describe the effect of making an election under Reg. §1.1367-1(g), which deals with the special ordering rules that apply to nondeductible expenses.
• Describe the self-charged interest rules.
• Explain the self-rental rules as they apply to the passive loss rules, strategies to avoid the 3.8% tax on net investment income, and the effect on the deduction under §199A.