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?

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 ______.

Prada has an excess business loss of $_ . She may use $_ of her share of the $580,000 LLC business loss to offset .

Any excess business loss is treated as part of the ____.

Prada has an excess business loss of $40,000. She may use $250,000 of her share of the $580,000 LLC business loss to offset non-business income .

Any excess business loss is treated as part of the treated as part of the taxpayer's net operating loss (NOL) carry-forward.

Explanation:

1. Nonincome loss is claimed when there is no income and therefore no tax will be deducted. The is conditional on the provision of the details of income on which non-income loss is claimed.

2. Taxpayer's net operating loss (NOL) carry-forward is relevant here because it is often used to offset the tax payments in other tax period through the tax authority when allowable deductions is higher than taxable income.