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I have a client who files as an S Corporation. The shareholders have zero basis. They have carried over losses of $45,000. They are looking to sell the business on January 1st. Can they use these accumulated losses to offset any capital gains on sale?


The BIDaWIZ Team's Answer:

The short answer is no. Per IRC Section 1366 & IRS Publication 542, if a shareholder sells their stock, suspended losses due to basis limitations are lost. Any gain on the sale of the stock does not increase the shareholder's stock basis.

The BIDaWIZ Team



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