Indigo, Inc., a personal service corporation, records the following income and losses for the current tax year.

 

a. Calculate Indigo’s taxable income for its current tax year.

b. Assume that instead of being a personal service corporation, Indigo is a closely held C corporation. Calculate Indigo’s taxable income for the current tax year.

c. Would the answer in part (b) change if the passive loss was only $320,000 rather than $333,000? Explain.

 

Active income $325,000 Portfolio income 49,000 Passive activity loss 333,000