It depends on whether or not you have enough basis to claim the loss. According to the IRS," If a shareholder is allocated an item of S corporation loss or deduction, the shareholder must first have adequate stock and/or debt basis to claim that loss and/or deduction item. In addition, it is important to remember that, even when the shareholder has adequate stock and/or debt basis to claim the S corporation loss or deduction item, the shareholder must also consider the at-risk and passive activity loss limitations and therefore may not be able to claim the loss and/or deduction item".
If your basis was zero in the beginning, then you did not have adequate stock basis to claim the loss.
S-Corp Stock and Debt Basis
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