The fact that a new tax entity may be created on bankruptcy filing has an enormous impact on the income tax consequences for the bankrupt.1 A recent Tax Court case2 has clarified the handling of S corporation losses in bankruptcy where the S corporation shareholder files for bankruptcy and the S corporation generates losses for the year.
Harl, Neil E.
"Handling S Corporation's Losses in Shareholder Bankruptcy,"
Agricultural Law Digest: Vol. 15
, Article 1.
Available at: http://lib.dr.iastate.edu/aglawdigest/vol15/iss22/1