In its first year, NewBiz enterprises loses money. Which type of owner would not be able to reduce his or her taxable income that year to reflect his or her share of the losses?

Question

Quizplus · Accepted Answer

Shareholders in a C corporation cannot deduct losses from their personal income taxes. Limited partners in a limited partnership and shareholders in subchapter S corporations can deduct their share of losses on their personal income taxes, and general partners in a limited partnership can deduct the losses as well, but as active participants in the business rather than passive investors.

In Its First Year, NewBiz Enterprises Loses Money