It is my understanding that losses from an S-Corp can only be taken when there is a basis to offset it. In other words, if at beginning of year, the corp stock basis was already a negative, and this year there was a further loss, they have no basis in stock. So, they cannot take that loss on personal return. Is this correct? If so, why is the program transferring the loss I am reporting from a K-1 (on Schedule E) to Schedule 1, Line 5?
