what it means - you can only deduct losses to the extent you have basis. the prior accountant's worksheet should show your basis as of the end of 2018. to that you add any money you put in (I'm assuming you didn't put in any non-cash items such as a car, real property, etc. ) either as a capital contribution or loan (but loans create a separate problem) now you have your basis for deducting losses (assuming threre were no distributions - box 16d). the losses that reduce basis are those that are deductible on your income tax return which most losses and deductions are (ignoring passive loss rules). expenses which aren't deductible would show up in box 16c - these are ignored for the time being. as i said your deductible losses are limited to your basis. and TT 1040 doesn't handle this unless you complete form 6198 (at risk). in most cases at-risk and basis have the same result but there can be a difference.
hate to say this but an LLC might have been just as good as an S-Corp and you would not run into problems like having to file an additional return and running into having to compute basis.
another issue with the S-Corp is the need to take salaries even if there are losses. there are no salary requiremnts for members in an LLC.
