Jordan and her brother Jason agree to purchase a hardware store from a local bank, which acquired it through foreclosure. Because the bank wants to sell the business, Jordan and Jason can buy it for only $160,000. Jordan will invest $42,000 and own 70% of the business, and Jason will invest $18,000 and own the remaining 30%. The bank is financing the remaining $100,000 with a nonrecourse loan secured by the building ($40,000), inventory ($45,000), and equipment ($15,000). Although Jordan and Jason believe that the store will prove to be an excellent investment within a few years, they expect losses of $35,000, $20,000, and $14,000 in the first three years of operation. They anticipate turning a profit of $16,000 in the fourth year. Jason and Jordan are unsure whether to operate the business as a corporation or an S corporation. Both will materially participate in running the hardware store. Explain to Jordan and Jason how the store’s operating results will be taxed if they operate as a corporation versus an S corporation.