In the current year, White, Inc., earns $$400,000$ from operations and receives $$36,000$ of interest income from various portfolio

investments. White also pays $$150,000$ to acquire a $20\%$ interest in a passive activity that produces a total $$200,000$ loss.

a$.$ Assuming that White is a personal service corporation, how will these transactions affect its taxable income?

A personal service corporation is allowed to offset passive activity losses against neither active nor portfolio income $.$

Therefore, White's taxable income is $$

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b$.$ Assuming that White is closely held but not a personal service corporation, how will these transactions affect its taxable income?

A closely held, non$-$personal service corporation is allowed to offset passive activity losses against

active income, but not against portfolio income $.$ Therefore, White's taxable income is $