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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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