Gwen and Travis Organized a New Business as an LLC

question 72

Multiple Choice

Gwen and Travis organized a new business as an LLC in which they own equal interests. The new business generated a $10,000 operating loss its first year. Travis has no other taxable income for the current year, but expects to have sufficient taxable income in future years to pay tax in the 24% tax bracket. Which of the following statements regarding Travis' tax savings from the current LLC loss is true?

• A) Travis can carry his share of LLC loss back two years as a net operating loss, and request an immediate tax refund of $1,200.
• B) Travis can carry his share of LLC loss forward, and will get tax savings only when he generates future income.
• C) Travis can only use his share of the LLC loss in the current year, and will receive no tax savings.
• D) The LLC will reallocate Travis share of the loss to Gwen, who can claim $1,750 of additional tax savings.

---

Definitions:

Patented Technologies

Technologies protected by patents, prohibiting unauthorized use, reproduction, or distribution.

Managerial Know-How

The practical knowledge and ability needed by individuals to effectively manage and lead organizations.

Customer Loyalty

A customer's commitment or repeat business to a single brand or company over time, influenced by positive experiences and satisfaction.

Expansion of Global Markets

The process of businesses extending their reach and operations into new international markets.