I have losses in my LLC and I structured my LLC as an S-Corp. Can I carry my losses from my LLC in my personal (since it's a flow thru entity)? How do I do that?

[hotaggie]

I have an LLC with S-Corp tax structure.  I want to know if I can carry my loss in my LLC forward in my personal income tax?  If so, where do I enter or how to keep track with how much to carry forward or how much deduction I can in a given year.  Thanks!

[Rick19744]

Assuming that you have the proper S election acceptance from the IRS, then you have several items to prepare:

• First, you need to prepare form 1120-S using TT Businesshttps://turbotax.intuit.com/small-business-taxes/
• Once the 1120-S is completed you will use the information on the Schedule K-1 and enter this into the applicable TT software product.  You will enter this in the business section.  Make sure you select the appropriate K-1 input form as TT will walk you through the various lines on the K-1.
• As a shareholder in an S corporation, you need to track your basis in your S corp investment.  This begins with you initial contribution and is adjusted annually by the applicable K-1 line items including any distributions.  As long as you have positive basis, you can utilize the losses from the S corp on your personal return to offset other income.  The key is basis cannot go below zero.  Any losses passed through in excess of zero will be suspended and carried over indefinitely.  If you have losses in excess of your basis, you will need to complete form 6198 in your personal tax return.  This form will track suspended losses.  I would also track them separately in an excel worksheet just as a verification or in case something happens in the software.

[hotaggie]

Hi Rick, To clarify, if my W2 income is 100K and I have a loss of 120K in my K-1, then I can carry that 20K extra over to next year and continue to claim excess 20K from last year?