From January to November, 20X1, WXYZ recognizes $400,000 in net operating losses. On November 30, 20X1, Rick purchased Ws entire 25% interest in WXYZ for $200,000. The company had $200,000 of operating income and $200,000 of operating expenses in December 20X1. Rick wants the maximum amount of deductions possible allocated to him for 20X1.

a)Discuss the ability of WXYZ to allocate losses to Rick, assuming WXYZ is an S-corporation.

b)Discuss the ability of WXYZ to allocate losses to Rick, assuming WXYZ is an LLC.

Note to more information: The question is complete.