Should bill and tom elect to have george treated

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George, Inc. has been a C corporation for 5 years earning a taxable income of less than $100,000. Thus the business has been subject to the lower C corporation tax rates, but due to cheap imports from Brazil, George's two owners, Bill and Tom, expect operating losses for the next five years. They hope to outsource some of the manufacturing to Mexico and turn the company around. How can they deduct these anticipated future losses?

The corporation receives some tax-exempt income, generates a small amount of passive investment income, and holds some C corporation earnings and profits. Each owner draws a salary of $82,000. George has issued two classes of stock, voting and nonvoting common. George is located in California. Bill lives in Nevada and Tom lives in Florida. Both Bill and Tom are married to nonresident aliens.

Should Bill and Tom elect to have George treated as an S corporation.

Reference no: EM132322193

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