loss on form 1120S doesn't reduce taxes owed

[flmgrip]

hello

i have a S corp that i own 100% single member. i had a loss in 2024.

when i enter my K1 information into my personal tax return, it doesn't reduce the amount of taxes owed.

shouldn't i be able to deduct my loss and reduce my tax liability?

Update: this loss is in box 2 - real estate rental ... more research shows it can only be written off against other "passive income", so this might be the reason? 

thank you!

[JamesG1]

In TurboTax Premium Online, review the calculations at the screen S Corporation Basis (IRS Requirement).

IRS form 7203 maintains the basis computation.  Your basis in the business must offset the loss before the loss may be taken on your personal 1040 income tax return.

A business loss is reported on line 11 in Part I.

@flmgrip

[Edited 03/03/25 | 7:07 pm PST]

[AmeliesUncle]

Is the loss in Box 1?  Did you tell the program that you "Materially Participate" in the business?

[flmgrip]

Box 2 ... which might be the reason it doesn't reduce the taxes.

However my understanding is that a can carry over those losses indefinitely? 

[AmeliesUncle]

Yes, rental losses may be limited.  Yes, they will carry forward until there is passive income so they can be used (or the activity is sold in a fully taxable transaction).

As a side note, having real estate in a corporation is generally a bad idea.  You may want to consult a good tax professional.

[flmgrip]

Thank you. 

To clarify the rental business is an LLC with election to be taxed as an S corp, but I'm starting to wonder if that election was a bad choice.

But now I am kinda stuck with that election ...

Thank you for all the help and advice! 

[AmeliesUncle]

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@flmgrip wrote:

But now I am kinda stuck with that election ...

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When did the S-election start (become effective)?

[Rick19744]

I certainly concur with @AmeliesUncle 

Did anyone help you in the decision making process?

[flmgrip]

Well, technically not yet as I'm still waiting for confirmation of the request ... however I did file the 1020S form as it's due ...

I started the LLC late last year ...

But I'm seriously considering just ditching all that and just file with schedule C ... but that of course could open an other can of worms ...

[flmgrip]

I did my best to research on the web ... I'm not making enough money to start spending money on tax consultants ...