Jace Seaton is a single taxpayer living in Eugene, Oregon. From 2009 to 2012, he worked as

Question:

Jace Seaton is a single taxpayer living in Eugene, Oregon. From 2009 to 2012, he worked as the CEO of Wengren & Jeffers, a local architectural firm. In 2013, he left the firm to start his own company. On October 25, 2013, he formed Seaton & Associates, a Limited Liability Company (LLC) under Oregon law.
Upon forming the LLC, Jace received an 80% interest in the company. Two other architects, Maria Juarez and Jaman Turhoon, each received a 10% interest in the company.
Jace provided all necessary capital, whereas Maria and Jamal provided experience and a commitment to work for the company. Seaton & Associates chose to be taxed as a for federal income tax purposes.
During 2013, Jace worked approximately 215 hours for Seaton & Associates, and received compensation of $7,200. Maria and Jamal each worked approximately 600 hours, and each received compensation of $16,000. In 2013, the company generated a net loss of $530,000.
Write a memo to Jace explaining how the LLC members, particularly Jace, should treat the loss generated in 2013.
• Reg. 1.469-5T
• Gregg v. U.S., 87 AFTR 2d 2001-337
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...