IRS more lenient on S-Corps showing losses

[AZ-Tax]

for 3 continuous yrs (especially single shareholder S-Corps) opposed to Schedule C (sole proprietor) showing losses for the 3 continuous yrs?

[Gretel]

I don't know about any difference between S-Corp. and C-Corp. but in general I heard that IRS believes you have a profit motive just because you go through all the trouble of forming a corporation. Of course, this is not a blank permission to be foolish.

[ChEAr$]

For the OP

IRS is officially "leniency neutral."

[outwest]

Well maybe..

but you do have the up-to-date s corp basis schedule, at risk determination and of course it's not a passive activity either? And you've also properly ordered the distributions to stock and loan basis, dealt with the distributions in excess of basis from the money losing corporation and the additional income when reduced basis shareholder debt is paid in full.

In other words, there are a lot more sand traps and bunkers down the fairway for the IRS to attack in a S corp.