A couple of comments:
- I agree with @Mike9241 in that this post and facts are confusing.
- Based on your facts, you need to make sure that you are tracking each debt separately as noted by Mike.
- Any allowed losses will be reported based on how they are reflected on the K-1; ordinary, capital, etc.
- Not sure how you are arriving at the conclusion that the losses had zero benefit?
- Do you have a net operating loss that needs to be considered?
- Do you need to look at the options of the net operating losses and make any appropriate election?
- Your debt basis will only be restored when the S corporation generates taxable income
- I'm going to suggest that you meet with a tax professional to make sure that you are handling the K-1 application on your personal tax return correctly.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
