Business & farm

The other issue that was not discussed, was whether or not you even had sufficient basis to take the loss.

Hopefully you are maintaining a basis schedule of your investment in the S corporation.  This is key since it determines allowable loss and will also be needed when you sell or liquidate the S corporation.

*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.