I am getting ready for taxes for an s corp. Last year 2015, the s corp had a loss of -612,583. This loss was allowed to be carried over to the only shareholder on k-1 because of a loan. This made retained earnings for this year -612,583. My question is, if the company has earnings this year, just say 612,583 to make it easy. This would zero out retained earnings. Would this earnings of 612,583 be passed to shareholder as taxable income since the loss was used on his last year personal tax return. If it is not taxable, then were on 1120s is that listed.