J owns a 50 percent interest in an S corporation.This year the S corporation produced a loss of $100,000.In determining the amount of loss that J may deduct, which of the following statements is true?

Question

Quizplus · Accepted Answer

The at-risk limitations are applied before the passive loss limitations for calculating the amount of loss deductible by an individual in an S corporation. Therefore, J's deductible loss would first be limited by the at-risk rules before considering any passive loss limitations.

J Owns a 50 Percent Interest in an S Corporation