Pass-Through S Corporation Losses Can Reduce the Basis in the Shareholder's

question 82

True/False

Pass-through S corporation losses can reduce the basis in the shareholder's loan to the entity, but distributions do not reduce loan basis.

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Definitions:

Capital Expenditures

Long-term investments made by a company in buildings, equipment, or other assets to improve or maintain its operations.

Direct Materials Purchases

Expenditures for raw materials that are directly traceable to the manufacturing of a product and are a significant part of the production process.

Fixed Assets

Long-term tangible assets held for business use and not expected to be converted to cash in the short term.

Accounts Receivable

Accounts receivable represent the money owed to a company by its customers for goods or services that have been delivered but not yet paid for.