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pablo owns 30% of cancun company, an electing s corporation. pablo's adjusted basis in the stock is $44,000 at the beginning of the current year. during the current year, cancun distributes a $60,000 dividend. cancun company reports a $200,000 operating loss for the current year. if pablo is not a material participant in cancun company, how much of the loss can he deduct on his income tax return?

Sagot :

Pablow's ownership is 30%, beginning stock = $44000, $60,000 dividend,  cancun company reports a $200,000 operating loss for the current year, Pablo's loss is 30% of 200000 - 60000 = 140000 = $42000

When operating costs outweigh gross income, a corporation experiences an operating loss (or revenues in the case of a service-oriented company). Operating profit is a company's profit before taxes and interest. In contrast to selling, general, and administrative expenses, interest and taxes are not regarded as operating expenses.

The fixed cost structure of a corporation has a significant impact on the magnitude of an operating loss. It needs greater sales when it has a high level of fixed costs in order to avoid making an operational loss.

To learn more about operating loss refer here:

https://brainly.com/question/5714181

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