Many businesses incur net operating losses, especially in the early years of their existence.

Explain what a net operating loss is.

What is the deductibility of net operating losses to the business or the owners when the business is operated as a "C" corporation, an "S" corporation or a partnership? Suppose the C corp. suffers an NOL of $10,000 in the year 2023. How does the C corp. treat this NOL? When is it deducted? Are there any limitations on the deduction?

Suppose X is a 20% shareholder in the XYZ S corp.. The XYZ S corp. suffers an NOL of $10,000. How does the $10,000 S corp. loss affect shareholder X? Are there any limitations on the amount that can be deducted by the shareholder?

Suppose A is a 20% partner in the ABC partnership. The ABC partnership suffers an NOL of $10,000. How does the $10,000 partnership loss affect partner A? Are there any limitations on the amount that can be deducted by the partner?