LO2 The Graves Corporation was incorporated in 2009 and incurred a net operating loss of $35,000. The company’s operating income in 2010 was $47,000. Because of a downturn in the local economy, the company suffers a net operating loss of $21,000 in 2011. What is the treatment of the 2011 loss? How would your answer change if Graves were an S corporation?