Grant and Amy have formed a new business to be operated through an S corporation. They each own 50% of the corporation's outstanding common stock. During the first year of operations, the business incurred an operating loss of $100,000. In allocating this loss to the shareholders:
A. Grant and Amy must each be allocated $50,000 of the operating loss.
B. If the corporate charter permits, the S corporation can make a special allocation of 100% of the operating loss to Grant.
C. Because the shareholders have limited liability for the S corporation's debts, they are not permitted any deduction for the operating loss.
D. The corporation should also consider ownership of any outstanding preferred stock in making the loss allocation.