What can mary do with the disallowed loss

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Question - Mary is a 50% shareholder in an S corporation, which suffered a $100,000 loss for the tax year ending December 31, 2002. Mary's basis in her stock as of December 31, 2002 was $25,000. What can Mary do with the disallowed loss of $25,000?

A. Carry back the loss three years to offset any personal taxes paid.

B. Carry forward the loss indefinitely for use if her basis in her stock is sufficiently restored.

C. Nothing. There is no provision for using disallowed losses from an S corporation, in any other tax year but that in which the loss occurred.

D. Mary does not have a disallowed loss and can use the full $50,000 loss in the 2002 tax year.

Reference no: EM133079884

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