Perry Owns All of the Stock of Sound Corporation

question 82

Multiple Choice

Perry owns all of the stock of Sound Corporation.Perry is also the President of Sound and works full-time running Sound.During the current year,Sound has a loss of $75,000 from its operations.
i.If Sound is an S Corporation,Perry deducts the loss on his personal tax return as a deduction from AGI.II.If Sound 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.

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Definitions:

Risk-Free Rate

The theoretical rate of return of an investment with zero risk, typically represented by the yield on government bonds.

Intrinsic Value

The actual value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

D1

Often used in dividend discount models, it represents the expected dividend per share for the next year.

Dividend Per Share

The amount of dividend that a company pays out to its shareholders for each share they own.