Peach Corporation had $210,000 of active income, $45,000 of portfolio income, and a $230,000 passive loss during the year. If Peach is a closely held C corporation that is not a PSC, it can deduct $230,000 of the passive loss in the year.

Question

Quizplus · Accepted Answer

A closely held C corporation that is not a personal service corporation (PSC) can only offset passive losses against passive income, not active or portfolio income. Therefore, Peach Corporation cannot deduct the $230,000 passive loss against its active or portfolio income.

Peach Corporation Had $210,000 of Active Income, $45,000 of Portfolio