Business & farm

But for the current year, you have to have either positive stock basis or positive debt basis.

 

There are two different and distinct issues here.  First is S Corp losses in excess of basis.

 

The other is passive losses.  You state you materially participate, so, passive losses might not be an issue.

But, the hurdle is still the losses in excess of stock or debt basis.  You can't claim a passive loss if not allowed as a loss from the S Corp due to basis limitations.

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