Cactus Company Is a Calendar Year S Corporation with the Following

question 6

Multiple Choice

Cactus Company is a calendar year S corporation with the following current year information: On January 1,John James bought 50% of Cactus Company stock for $30,000.How much of the operating loss may John deduct on his Form 1040? Assume the excess business loss limitation does not apply.

• A)$60,000
• B)$30,000
• C)$40,000
• D)$50,000

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Definitions:

Confidentiality

The principle of maintaining privacy by not disclosing information shared in a trusted relationship, unless consented to or otherwise required by law.

Relative Confidentiality

A principle in certain professions where the confidentiality of client information is respected but may be overridden in specific circumstances determined by law or ethical guidelines.

Privilege

Special rights, advantages, or immunities granted or available only to a particular person or group of people.

Maximizing

The process of making the most or best use of resources, opportunities, or capabilities.