1. Per the text and IRC, losses and deductions of an S
corporation pass through to the shareholders of the corporation and are limited
to the shareholders’ basis in the S corporation. Suggest a plan for a client to
increase the deductible pass through loss and deductions over the initial
investment from a new wholly owned S corporation.
2. Go to the Tax Almanac Website, located at
http://www.taxalmanac.org/index.php/Tax_Research_Resources, or use the Internet
and Strayer databases to research S corporation distributions and taxation,
differentiate between the treatment of S corporation distributions from
corporations having no earnings and profits, and corporations having
accumulated earnings and profits. Suggest the most significant reason for the
difference in the treatment of distributions. Justify your response.
