Jace Seaton is a single taxpayer living in Eugene, Oregon. From 2011 to 2014, he worked as
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Upon forming the LLC, Jace received an 80% interest in the company. Two other architects, Maria Juarez and Jaman Turhoon, each received a 10% interest in the company. Jace provided all necessary capital, whereas Maria and Jamal provided experience and a commitment to work for the company. Seaton & Associates chose to be taxed as a partnership for federal income tax purposes.
During 2015, Jace worked approximately 300 hours for Seaton & Associates, and received a guaranteed payment of $100,000. Maria and Jamal each worked approximately 600 hours, and each received a guaranteed payment of $150,000. In 2015 the company generated a net loss of $530,000.
Write a memo to Jace explaining how the LLC members, particularly Jace, should treat the loss generated in 2015.
• Reg. 1.469-5T
• Gregg v. U.S., 87 AFTR 2d 2001-337
Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...
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Related Book For
Federal Taxation 2016 Comprehensive
ISBN: 9780134104379
29th Edition
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
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