(1) Carryforwards and carrybacks to and from taxable periods of an S corporation shall be restricted in the manner provided in Section 1371(b) of the Code.
(2) The aggregate amount of losses or deductions of an S corporation taken into account by a shareholder of the S corporation for a taxable period pursuant to Section 27-8-7(2) shall not exceed the shareholder’s combined adjusted basis, determined in accordance with Section 27-8-11, in the stock of the S corporation and any indebtedness of the S corporation to the shareholder.
(3) Any loss or deduction of an S corporation which is disallowed for a taxable period pursuant to subsection (2) of this section shall be treated as incurred by the corporation in the succeeding taxable period with respect to that shareholder.
(4)
(a) Any loss or deduction of an S corporation, which is disallowed pursuant to subsection (2) of this section for the corporation’s last taxable period as an S corporation, shall be treated as incurred by a shareholder on the last day of any post-termination transition period.
(b) The aggregate amount of losses and deductions taken into account by a shareholder under subsection (4)(a) of this section shall not exceed the shareholder’s adjusted basis in the stock of the corporation (determined in accordance with Section 27-8-11 at the close of the last day of any post-termination transition period and without regard to this subsection (4)).
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