Carryforwards and carrybacks; loss limitation

# (a)

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 Internal Revenue Code.

# (b)

The aggregate amount of losses or deductions of an S corporation taken into account by a shareholder pursuant to section 235-122(c) shall not exceed the combined adjusted bases, determined in accordance with section 235-124, of the shareholder in the stock and indebtedness of the S corporation.

# (c)

Any loss or deduction which is disallowed for a taxable period pursuant to subsection (b) shall be treated as incurred by the corporation in the succeeding taxable period with respect to the shareholder.

# (d)

# (1)

Any loss or deduction which is disallowed pursuant to subsection (b) 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.

# (2)

The aggregate amount of losses and deductions taken into account by a shareholder pursuant to paragraph (1) shall not exceed the adjusted basis of the shareholder in the stock of the corporation (determined in accordance with section 235-124 at the close of the last day of any post-termination transition period and without regard to this subsection).