P is the sole shareholder as well as an employee of PQ Accounting Services Incorporated.The corporation concentrates on tax return preparation and preparation of monthly financial statements.P currently owns an interest in a limited partnership in which he expects to generate losses for the next several years.Assuming P transfers the interest in the partnership to the corporation, any losses of the partnership may be used to reduce the corporation's taxable income.

Question

Quizplus · Accepted Answer

The tax losses from a partnership passed through to a corporation cannot be used to offset the corporation's other taxable income due to entity structure differences and tax regulations that prevent the direct use of pass-through losses to offset corporate income.

P Is the Sole Shareholder as Well as an Employee