So the facts are still somewhat fuzzy:
- You as an investor should be maintaining a basis schedule of your basis in your S corp investment. The instructions link provided by @LudwigVan_fan should provide some guidance.
- Your basis can never go below zero.
- One item that has not been explained is whether you are a passive investor or materially participate. This will make a difference in how your losses are utilized on your 1040.
- If you are a passive investor, your losses can only be utilized to the extent you have other passive income.
- Both passive and material participant will have a floor on losses to the extent of their basis.
- When utilizing losses there is a hierarchy in looking at whether losses can be utilized; first is basis, second is at-risk and finally the passive activity rules.
- So to address your specific question, you will be able to utilize your suspended losses to the extent you have basis / at-risk. If you pass that hurdle and you are a passive investor, then you will utilize suspended losses to the extent you have passive income from this K-1 or another passive investment K-1.
- Technically, you wouldn't be able to have passive activity suspended losses unless you had basis / at-risk.
- As noted by @LudwigVan_fan , this is a fairly complicated area and it may be in your best interest to consult with a tax professional at some point so you understand the rules and apply them 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.
