This year, Jack's Uncle passed away and left him a life insurance policy with a $700,000 payout. Jack decided to be paid out the entire amount this year. Since the Wilma's support so many people, they are worried about continuing to support them if anything happens to them. After paying off their credit card debt of $250,000 and urgent home foundations repairs of $250,000, the Wilma's want to invest the remaining insurance funds. They ask your advice about the following: 

The Wilma's want to receive the most amount of cash as possible even if it means that they have to pay tax. They are considering the following 2 investments for $200,000 this year. 

1) Life LLC, a farm in LA area that will generate a loss allocated to the wilma's of $20,000 this year and will do so every year for the 5 years total, then in year 6 they will allocate the receive $150,000 of income. 

 

2) BIC Partnership, a start up company in SJ that will generate a loss of $60,000 this year, next year they will be allocated and receive income of $30,000 and another $30,000 the following year. 

 

After advising which investing they should choose, calculate what is their gain or loss reportable on their form 1040 this year for that investment?