Question

Timothy Gates and Prada Singh decide to form a new company, TGPS LLC (a multimember LLC that will report its operations as a partnership). Timothy is married, and Prada is single. Each contributes $400,000 of capital to begin the business, and both materially participate in the business. In 2019, TGPS reports a net loss of $580,000. What are the implications of this loss for Timothy and Prada?

 

 

Answer 1

Prada has an excess business loss of $ 40000 . She may use $ 250000 of her share of $580000 LLC business loss to offset non business income .

 

As per new limit for IRS excess business loss will be for a single in excess of $250000. Any excess above this amount will be disallowed and treated as excess business loss which will be carried forward to next years

 

Now here as Prada is single she has $290000 share in total loss of $580000 as per new IRS limits she is allowed up to $250000 to set off against current years non business income and $40000 she can carry forward future years this excess business loss of $40000 is treated as part of the taxpayer's NOL carry forward.

Prada has an excess business loss of $ 40000 . She may use $ 250000 of her share of $580000 LLC business loss to offset non business income .