Barry owns all of the stock of Jerrico Corporation;an internet based gaming firm.Barry is also the President of and works full-time for Jerrico.During the current year,Jerrico has a loss of $125,000 from its operations.
i.If Jerrico is an S Corporation,Barry may deduct the loss on his personal tax return as a deduction for AGI.II.If Jerrico is a regular corporation,the corporation can elect to carryforward the loss to reduce taxable income during the next 20 years.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Barry owns all of the stock of Jerrico Corporation;an internet based gaming firm.Barry is also the President of and works full-time for Jerrico.During the current year,Jerrico has a loss of $125,000 from its operations.
i.If Jerrico is an S Corporation,Barry may deduct the loss on his personal tax return as a deduction for AGI.II.If Jerrico is a regular corporation,the corporation can elect to carryforward the loss to reduce taxable income during the next 20 years.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

If Jerrico is an S Corporation, Barry can deduct the loss on his personal tax return as a deduction for AGI because S Corporation losses pass through to shareholders. If Jerrico is a regular corporation, it can carry forward the loss to offset future taxable income for up to 20 years.

Barry Owns All of the Stock of Jerrico Corporation;an Internet