Question

Timothy Gates and Prada Singh decide to form a new company, TGPS LLC (a multimember LLC that will report its operations as a partnership). Timothy is married, and Prada is single. Each contributes $400,000 of capital to begin the business, and both materially participate in the business. In 2018, TGPS reports a net loss of $580,000. What are the implications of this loss for Timothy and Prada? If an amount is zero, enter "0".

Timothy has an excess business loss of $ 0 . He may use $ 290,000 of his share of the $580,000 LLC business loss to offset nonbusiness income . Prada has an excess business loss of $___________ . She may use $_________ of her share of the $580,000 LLC business loss to offset nonbusiness income .

Any excess business loss is treated as part of the taxpayer's NOL carryforward .

Answer 1

Prada has an excess business loss of $ 40000 . She may use $ 250000 of her share of $580000 LLC business loss to offset non business income .

As per new limit for IRS excess business loss will be for a single in excess of  $250000. Any excess above this amount will be disallowed and treated as excess business loss which will be carried forward to next years

Now here as Prada is single she has $290000 share in total loss of $580000 as per new IRS limits she is allowed up to $250000 to set off against current years non business income and $40000 she can carry forward future years this excess business loss of $40000 is treated as part of the taxpayer's NOL carry forward

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