An S election allows shareholders to realize tax benefits from losses immediately.

Question

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When a corporation elects to be taxed as an S corporation, it is considered a pass-through entity for tax purposes. This means that profits and losses flow through to the shareholders' personal tax returns. Shareholders can use the losses to offset other income on their personal tax returns immediately, without having to wait for the corporation to generate profits.

An S Election Allows Shareholders to Realize Tax Benefits from Losses