While the at-risk limitations are calculated on IRS Form 6198 and the passive activity limitations are calculated on IRS Form 8582, there is not an IRS form for the potential limitations on the amount of corporate losses that you may deduct based on your basis in the corporation. You would need to enter only the loss allowed on Line 1 of the Schedule K-1. Then you would need to manually track the basis and the amount not allowed in the current year, which could be carried forward to the time when the basis in the S Corporation allows the loss to be taken.
There are three potential limitations on corporate losses that you can deduct on your return. These limitations and the order in which you must apply them are as follows:
- The basis rules
- The at-risk limitations (calculated on IRS Form 6198)
- The passive activity limitations (calculated on IRS Form 8582)
For more information, see the Shareholder's Instructions
for Schedule K-1
(Form 1120S), page 1. Each of these limitations is discussed separately in the instructions.