I've followed the IRS instructions for filling out this form. In the case of my S-Corp we have a negative loss with the business. Based on my understanding of the instruction, Part 1 should only be showing a gain in Part 1 which in my case would be 0 which is supposedly allowed. In Part III I would enter my loss as a positve number since it's under the Deduction section. I've done this and run the error check. The error states that I cannot have a gain in Part 1 and a loss in Part III even though my basis is higher than the loss. What am I not understanding with this form.
