Question
Gwen and Travis organized a new business as an LLC in which they own equal interests. The new business generated a $10,000 operating loss its
Gwen and Travis organized a new business as an LLC in which they own equal interests. The new business generated a $10,000 operating loss its first year. Travis has no other taxable income for the current year, but had sufficient taxable income in prior years to pay tax in the 28% tax bracket. Which of the following statements regarding Travis' tax savings from the current LLC loss is true? a.Gwen and Travis can carry their share of LLC loss forward indefinitely. b.Travis can only carry his share of LLC loss forward, and will get tax savings only when the LLC generates future income. c.Travis can only use his share of the LLC loss in the current year, and will receive no tax savings. d.The LLC will reallocate Travis share of the loss to Gwen, who can claim $1,750 of additional tax savings. ANSWER B IS INCORRECT.
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