Jace Seaton is a single taxpayer living in Eugene, Oregon. From 2018 to 2021, he worked as the CEO of Wengren & Jeffers, a local architectural firm. In 2021, he left the firm to start his own company as well as spend more time golfing and travelling. On October 25, 2023, he formed Seaton & Associates, a Limited Liability Company (LLC)

under Oregon law.

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 2023, 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 2023 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 2023.