TurboTax

Level 2

Solved

Salary as loss in Scorp

Hello,

My S-CORP that did not have any income/earnings this year. However I paid salary my self during year.

For example, company had 100K in bank account in the beginning of the year, and after salary (60K) paid, 40K is left on companies bank account.

My question is that:

1- Does the salary (60k) count towards being a "loss" for the company?

2- Can I use the loss amount (60K) as deduction in my personal return (thru K-1) ?

Thanks much for any input!

Best answer by Anonymous_

I think there is a problem with Turbotax software.

According to instructions of 6198, line 21 supposed to take the lesser amount of line 5 or line 20.

Line 20 is 0 and Line 5 is a negative number.

Line 21 appears as 0, but it should be the number on Line 5.

Where I should report this? Any idea?

@onurcoo This is for your personal income tax return? You have an amount that is not at risk?

Parenthetically, do not forget that Line 21 is the lesser amount of line 5 or line 20 where Line 5 is treated as a positive number.

Level 15

Yes, the loss will count as it is a nonpassive loss (which will appear on page 2 of your Schedule E).

The loss will be deductible (i.e. reduce) other income on your return (via your K-1 entry).

Level 2

Thanks for the reply tagteam!

I guess I need to enter "Adjusted Basis" in the personal return to be a able to take the deductible?

If so, should I enter the amount of money left in corp's bank account (100K) as "adjusted basis"?

Thanks much again!

Level 15

You need to attach a basis computation to your return; you can find a template of sorts and more information at the IRS web site linked to below.

9 replies