Question

Tim, a single taxpayer, operates a business as a single-member LLC. In 2019, his LLC reports business income of $404,500 and business deductions of $707,875, resulting in a loss of $303,375. What are the implications of this business loss? a. Tim has an excess business loss of $ b. Can this business loss be used to offset other income that Tim reports? If so, how much? If not, what happens to the loss? Tim may use of the $303,375 LLC business loss, to offset nonbusiness income treated as part of Tim's NOL carryforward . . The excess business loss is

Answer 1

DATE: PAGE NO Tim, a single $_303,375. taxpayes, has a loss of La. Tim has an excess business loss of __303,375 - 250,000__-_ 53,375. An excess business loss is the excess, if any of the aggregate decludions from an individuals trades or business, over * The sum of a) aggregate income from these trades on business plus - b) $ 250,000 if single on $500,000 if married filing pointly. - Total loss 303,375-250,000 -=534375 ie excess loss. b. Generally business losses that are passed through to these owners can be used to offset other personal income. But if there is an excess business loss, it can't be used currently. Instead it's treated as a net operating loss (NOL) carryover. This means the NOL is carried forward and can be used to offset 80% of taxable income in future | Yenid until its used up ned with

| Conclusion: Tim may use $0 of the $ 303375 ile business loss, to offset non business income. As $250.000 és allowed as deduction. The excess loss es treated as part of Tim's NoL carey forward. ca Scanned with CamScanner