How are Business losses treated on my personal income tax?
I am currently employed, but will be starting a business, set up as an s-corp. If this business losses money...say $10,000, how will that be treated on my personal income taxes?
Public Comments
- S-corp files its own tax return but does not pay tax (except for a few states). The income or loss passes through to the owner(s) of the S-Corp and the owners report his or her share of income/loss on individual return. Form 1040 Schedule E is where the S-Corp income/loss is reported. As to how the 10K loss is treated, you first need to determine whether your participation in business is considered "active" or "passive" (passive has limitation). IRS Publication 925 gives you the details you might need.... http://www.irs.gov/publications/p925/ar02.html
