Han’s old buddy Lando has been promoting oil and gas mining ventures and has asked him to invest in Bespin LLC which currently is operating at a loss. Han invested $10,000 in the mining interest on January 3, 2019 and it threw-off a $1,000 passive loss to him in 2019. Heeding Leia’s advice, Han instructed his broker to sell the Bespin LLC shares on March 28, 2019. The broker did not get the trade order into the system so that the shares were not actually sold until April 2, 2019. The selling price was $16,300. The broker charged Han a 3% commission to sell the shares in Bespin LLC.

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 firm’s senior partner (me). 

Assume it all happened in the U.S.