My wife and I purchased a business last September and established it as an S Corp. We reported a loss for the year, however, I am not sure if I should report the entire loss on my personal returns given our tax basis. We had a CPA complete the returns for the business and from the Schedule K-1, the loss is ($6,565), however, on the basis worksheet, it states the total allowed loss is ($5,546) with a loss to carryforward of ($1,019). Should I report the allowed loss of ($5,546) on our personal returns as opposed to the total loss for the year?
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You should report the Schedule K-1 exactly as it was prepared, to include any information about your basis.
In order for an S-Corp shareholder to claim a loss, they need to demonstrate they have adequate stock and/or debt basis. See: IRS - S Corporation Stock and Debt Basis
It appears that your S-Corporation's loss exceeded your and your wife's basis in the S-Corp, and there are Basis Limitations for K-1 Losses.
Just to add here that the next year, in order to add this loss you'd just need to simply follow Line 27 of these instructions: https://www.irs.gov/instructions/i1040se#idm[phone number removed]448
It took me a while to find this (how to claim the loss from a past schedule k1)
What do you enter for Box 17 V which asks for numbers from form 199A, including Ordinary Business income/loss -- must this number also be adjusted? e.g. does it need to match what you entered in Box 1 or should it include the full loss amount?
Usually when you record information for Box 17 V, all the information that is recorded in this section is all in the supplementary statements that came with your K1. You should not need to adjust or interpret anything.
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