Loss Limitations
Deducting Pass-Through Losses
Although losses pass through to shareholders, deductions may be limited by stock basis, debt basis, at-risk rules, passive activity rules, and other statutory provisions.
- Stock basis limitation.
- Debt basis limitation.
- At-risk limitation.
- Passive activity limitation.
- Excess losses may be suspended.
Note
A shareholder generally cannot deduct losses exceeding available basis.
Summary
Several limitation rules determine whether shareholders may currently deduct passed-through losses.