During the year,Bear Company incurs a $25,000 loss on a passive activity,has active income of $17,000,and portfolio income of $12,000.If Bear is a personal service corporation,it may deduct all of the $25,000 passive loss.

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As a personal service corporation, Bear Company cannot deduct passive losses in excess of passive income. Therefore, it would only be able to deduct up to $17,000 of the $25,000 passive loss in this scenario.

During the Year,Bear Company Incurs a $25,000 Loss on a Passive