The passive activity loss rules apply to S corporations but not to C corporations.

Name: The passive activity loss rules apply to S corporations but not to C corporations.
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The passive activity loss rules apply to individual taxpayers, estates, trusts, closely held C corporations, and personal service corporations, but not to S corporations directly. S corporation losses pass through to the shareholders, who may then be subject to the passive activity loss rules on their individual returns.

The Passive Activity Loss Rules Apply to S Corporations but Not