Pelican LLC, a technology startup was formed by Sophie and Linda, both of whom materially participate in the business. Pelican, LLC reports as a partnership for Federal tax purposes. Sophie is a single taxpayer and she invests $500,000 of capital, as does her business partner Linda, who is married. In 2021, the LLC reports a net loss of $750,000. Each LLC member receives a Schedule K- 1 from the LLC indicating the amount of ordinary loss; each will report their share of loss on their 2021 individual income tax return [on Form 1040 (Schedule E)]. How much is Sophie's excess business loss in 2021? Also, how much loss can Linda deduct in 2021?
Pelican LLC, a technology startup was formed by Sophie and Linda, both of whom materially participate in the business. Pelican, LLC reports as a partnership for Federal tax purposes. Sophie is a single taxpayer and she invests $500,000 of capital, as does her business partner Linda, who is married. In 2021, the LLC reports a net loss of $750,000. Each LLC member receives a Schedule K- 1 from the LLC indicating the amount of ordinary loss; each will report their share of loss on their 2021 individual income tax return [on Form 1040 (Schedule E)]. How much is Sophie's excess business loss in 2021? Also, how much loss can Linda deduct in 2021?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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![Question 4
Pelican LLC, a technology startup was formed by Sophie and Linda, both of whom materially
participate in the business. Pelican, LLC reports as a partnership for Federal tax purposes. Sophie is
a single taxpayer and she invests $500,000 of capital, as does her business partner Linda, who is
married. In 2021, the LLC reports a net loss of $750,000. Each LLC member receives a Schedule K-
1 from the LLC indicating the amount of ordinary loss; each will report their share of loss on their
2021 individual income tax return [on Form 1040 (Schedule E)]. How much is Sophie's excess
business loss in 2021? Also, how much loss can Linda deduct in 2021?
$375,000; $375,000
$113,000; $375,000
O $259,000; $518,000
$250,000; $500,000
$125,000; $259,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9f9bab9e-2fe2-4df0-bfa9-68a40e13fe5c%2F7a7ead7e-dc52-4ba8-8377-6a0ad7c5c6cf%2F4mv8doq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Question 4
Pelican LLC, a technology startup was formed by Sophie and Linda, both of whom materially
participate in the business. Pelican, LLC reports as a partnership for Federal tax purposes. Sophie is
a single taxpayer and she invests $500,000 of capital, as does her business partner Linda, who is
married. In 2021, the LLC reports a net loss of $750,000. Each LLC member receives a Schedule K-
1 from the LLC indicating the amount of ordinary loss; each will report their share of loss on their
2021 individual income tax return [on Form 1040 (Schedule E)]. How much is Sophie's excess
business loss in 2021? Also, how much loss can Linda deduct in 2021?
$375,000; $375,000
$113,000; $375,000
O $259,000; $518,000
$250,000; $500,000
$125,000; $259,000
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