[§235-125]  Carryforwards and carrybacks;loss limitation.  (a)  Carryforwards and carrybacks to and from taxableperiods of an S corporation shall be restricted in the manner provided insection 1371(b) of the Internal Revenue Code.

(b)  The aggregate amount of losses ordeductions of an S corporation taken into account by a shareholder pursuant tosection 235-122(c) shall not exceed the combined adjusted bases, determined inaccordance with section 235-124, of the shareholder in the stock and indebtednessof the S corporation.

(c)  Any loss or deduction which is disallowedfor a taxable period pursuant to subsection (b) shall be treated as incurred bythe corporation in the succeeding taxable period with respect to theshareholder.

  (d)(1)  Any loss or deduction which is disallowedpursuant to subsection (b) for the corporation's last taxable period as an Scorporation shall be treated as incurred by a shareholder on the last day ofany post-termination transition period.

(2)  The aggregate amount of losses and deductionstaken into account by a shareholder pursuant to paragraph (1) shall not exceedthe 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 ofany post-termination transition period and without regard to this subsection).[L 1990, c 16, pt of §1]