Question

Which of the following statements regarding the tax treatment of losses is false?

Question 34 options:

A)	Losses of a business organized as a partnership are deductible by the partners, potentially generating immediate tax savings.

B)	Losses of a business organized as an S corporation are deductible by the shareholders, potentially generating immediate tax savings.

C)	Losses of a business organized as an S corporation create Net Operating Loss carryforwards, deductible in future years when the business generates a profit.

D)	Losses of a business organized as a C corporation create Net Operating Loss carryforwards, deductible in future years when the business generates a profit.

Answer 1

Question :Which of the following statements regarding the tax treatment of losses is false?

Answer : C) Losses of a business organized as an S corporation create Net Operating Loss carryforwards, deducitble in future year when the business gernerates a profit.

According to IRS " S corporation is exempt from federal income tax other than capital gain and passive income.

S corporation income is taxable in the hand of its shareholders as the S corporation income is pass on to its shareholders