Yes, I am showing a negative number on Item F of the 1120-S as my total income was less than my deductions. Is that allowed?
I am the only shareholder in my S Corp and own 100% of the corporation. Are you saying that if I have a negative k-1 I will be able to deduct that from my w-2 income that I paid to myself
we can't see your return but are you saying that item F on Page 1 of the 1120S is negative? That usually only occurs when there's a cash overdraft. however, putting shareholder loans that you made to the corporation on line 7 of schedule L rather than where they belong which is on line 19 can also produce that result.
since you have a loss when you do your 1040 you'll need to complete form 7203 to justify to the IRS that you have basis to take the losses. if not the losses to the extent they exceed your tax basis will not be deductible. you don't lose them. They carry forward until either there's sufficient profit or you otherwise increase your basis in the corp. Be wary and seek professional advice if you repay reduced basis loans. the tax trap is that you will generate taxable income
