Losses do not pass through to shareholders. Liability Shareholders are shielded from personal liability for business debts. Only their investment is at risk. Generally, no federal tax on the business entity. Income and expenses are allocated among shareholders.
Losses pass through to shareholders.
Restrictions on loss deductibility apply. State treatment of S corporations may vary. Liability Shareholders are shielded from personal liability for business debts. Only their investment is at risk. No federal tax on business entity.