Any operating loss suffered by an S corporation is shared and immediately deductible on the returns of its shareholders.

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As a rule of thumb, S corporations have distinct advantages for a business operating at a loss because the loss is shared and immediately deductible on the returns of the shareholders. S corporations cannot have more than 100 shareholders, each of whom must elect to have the corporate income allocated to the shareholders annually in computing their income for tax purposes, whether actually paid out or not.

Any Operating Loss Suffered by an S Corporation Is Shared