Over on IowaBiz.com Joe Kristan has an excellent post describing the basic tax treatment of S corporation losses.  Joe says,

Bottom line? The ability to deduct business losses is a good reason for many taxpayers to use S corporations.  If you expect S corporation losses, talk to your tax pro before year-end to make sure you are eligible to deduct them.

I always say that the choice of entity (C Corp. v. S Corp. v. LLC) usually boils down to tax treatment.  Joe’s article demonstrates why.  If you are forming a new business you not only need to talk with your business lawyer but also an accountant.