S-Corp Capital Gains Offset Operating Losses
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warrencmb
Level 2

S-Corp Capital Gains Offset Operating Losses

I have tried to find an answer without much luck to what appears to be an uncommon situation with s-corps, so figured I give this forum a try.

 

Given the events of the current year, I'm currently looking at a net operating loss for my s-corp (which goes over my stock basis). However, I took advantage of the market crash back in March and bought some stocks using the company's brokerage account which resulted in some decent short-term capital gains that should offset the operating loss and yield a net positive cash balance at the end of the year. I'm rather confused on how this would impact taxes. Do I still qualify to deduct the s-corp operating loss (beyond my stock basis) in my personal taxes and add up the capital gains to my personal cap gains? or is it much more complicated than that?

 

Any help is much appreciated!

3 Replies
mellish7777
Level 4

S-Corp Capital Gains Offset Operating Losses

S-Corps don't have net operating losses....they have net losses that are passed through to the shareholders. If you have basis you can use that net loss to offset other income but if you do not have basis you can't.
warrencmb
Level 2

S-Corp Capital Gains Offset Operating Losses

Thanks for the quick response @mellish7777! The pass-through loss makes sense, I have done it in the past as well. I'm particularly interested in learning about how that pairs with capital gains for the s-corp, specially when it offsets the loss. Thank you!

Anonymous
Not applicable

S-Corp Capital Gains Offset Operating Losses

here's a link to a worksheet that you can use to compute your basis.  net capital gains would go on line 7 of the worksheet.  your basis is stock basis line 20 + loan basis, if any. 

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