hance's initial year with the venture is bad for business but provides an opportunity to offset his personal income from other sources. Nonetheless, the amount of loss Chance is entitled to is limited by his stake in the business and the $80,000 operating loss. A business corporation offers Chance the opportunity to claim tax losses without the imposition of loss limits (Davidson, 2019). He may decide to gain a tax deduction based on his stake in the business (0.01*20000=2000). Assuming that passive activity rules do not apply, Chance would claim a loss in his tax return for the first year of business. He would carry it forward to reduce his income in the subsequent tax year. It is a prudent decision as it will reduce his tax bill. Chance's losses do not exceed the US Fed Cap set at $262,000. Therefore, he would not risk losing out on tax deductions from the business's operating loss. He must report his losses (0.01*80000=8000) in a personal income statement. Business partners record their organization's performance in separate individual accounts.