In regard to losses, what type of tax treatment would an S corporation provide?

A) Shareholders may deduct corporate losses from their personal income.
B) Losses may only be deducted from the S corporation's taxes, not the shareholders' personal income.
C) Losses may only be deducted from shareholders' personal income when the S corporation has shown a profit for at least two years.
D) Losses may only be deducted from shareholders' personal income when the S corporation has shown a profit for at least three straight years.
E) Losses may only be deducted from shareholders' personal income when the shareholder's gains from other endeavors exceed losses from the S corporation.

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Janerah Sarip · Accepted Answer

Final Answer : A, Explanation :  In an S corporation, shareholders can deduct corporate losses on their personal income tax returns, which helps in reducing their overall tax liability. This pass-through taxation feature is one of the key advantages of an S corporation, allowing losses to flow through to the individual shareholders' tax returns.

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