IRC Section 1367(a)(2)(B) allows S Corporation pass-through losses to reduce the S Corporation basis if allowed or allowable, regardless of the S Corporation shareholders claiming the losses on their income tax return. However, the excess losses and deductions are limited to the S Corporation shareholder's adjusted basis in stock plus any adjusted basis in any corporate indebtedness to the shareholder. Tax planning is an essential part of CPA firms and valuable services to clients.

1) Suggest a plan for a client to maximize the deductible pass-through losses and deductions over the initial investment from a new wholly owned S Corporation.