GSLLC is owned by Han and Leia 50-50. Han owns 1% managing membership and 49% limited membership while Leia owns 50% limited membership. Han actively manages the shipping business. Due to increased insurance and energy costs GSLLC lost $39,000 in 2019.

Han and Leia have come to you for tax help . What issues does their set of facts present to you as their tax advisor? What advice do you have for them? Please make any assumptions that you need in order to address and respond to the issues presented by the fact pattern. Clearly state the assumptions that you make. It is advisable to utilize a memorandum style in which you address the facts, issues, analysis and conclusions. Support your answers with cites to code, regulations, cases, rulings, IRS publications or other research data. Unsupported conclusions without proper analysis will not win you points with the firms senior partner (me). Good luck. How would this business effect their taxes?