Can K1 losses be carried forward?

[Seidy Lasker]

If someone had an S-corp with K1 losses but the losses were too much to cover their W2 income, can this be carried forward OR is it better if they claimed less in bonus depreciation to spread their S-corp losses in future years?

[Greg Scott]

Generally, K1 losses can be carried forward to offset future passive income.  Whether or not it makes sense for you to take bonus depreciation depends on a number of factors.   The biggest is how much you can use the deductions and the next most important factor is the holding period.  It makes very little sense to take bonus depreciation on a short-term hold while it makes more sense on a long-term hold.

[Michael Plaks]

Quote from @Seidy Lasker:

If someone had an S-corp with K1 losses but the losses were too much to cover their W2 income, can this be carried forward OR is it better if they claimed less in bonus depreciation to spread their S-corp losses in future years?

There is no generic answer to your question, it's case by case. First, the mention of bonus depreciation makes me wonder whether you're talking about holding rental properties inside an S-corp which is a bad idea generally.

Second, if you're applying S-corp losses against your W2 income, they must be non-rental losses from something that you materially participate in, and you must have sufficient "basis" in your S-corp to take the loss. This is often not the case.

Moving deductions into future years is a legitimate tax strategy in the right circumstances, but it takes a multi-year analysis. You're trying to get a quick rule of thumb instead, and it won't be useful even if someone volunteers such an answer.

[Julio Gonzalez]

@Seidy Lasker Yes, your K-1 losses can be carried forward. What type of asset(s) does the bonus depreciation you're taking relate to? Does your CPA specialize in real estate taxation? I know they are probably very busy this time of year, but it'd be very useful to get some time on their calendar to discuss these two scenarios as the answer is really on a case-by-case basis.

[Chris Picciurro]

You can carry losses forward. Review IRS Form 8582 for details or talk to your tax professional. Good luck!