Question

mr. tuck and ms. under organized a new business as an llc in which they own equal interests. the new business generated a $3,800 operating loss for the year. Required: If Mr. Tuck’s marginal tax rate before consideration of the LLC loss is 35 percent, compute his tax savings from the first-year LLC loss. Assume the basis and excess business loss limitations do not apply.

Answer 1

Mr. Tuck's tax savings from the first-year LLC loss is $1,330.

Step-by-step explanation:

Mr. Tuck's tax savings from the first-year LLC loss can be calculated by multiplying the operating loss by his marginal tax rate. In this case, the operating loss is $3,800 and his marginal tax rate is 35%.

To find the tax savings, we multiply the operating loss by the marginal tax rate:

Tax savings = Operating loss * Marginal tax rate

Tax savings = $3,800 * 0.35 = $1,330

Therefore, Mr. Tuck's tax savings from the first-year LLC loss is $1,330.

Answer 2

Mr. Tuck's tax savings from the LLC loss is calculated by applying his marginal tax rate of 35% to his share of the loss. His share of the $3,800 loss is $1,900, hence his tax savings are $665.

Step-by-step explanation:

To calculate Mr. Tuck's tax savings from the LLC operating loss, we need to apply his marginal tax rate to the amount of the loss. Since the business generated a $3,800 loss and Mr. Tuck owns an equal interest in the LLC, his share of the loss would be half of that amount, which is $1,900. Considering his marginal tax rate is 35%, the tax savings would be the loss amount multiplied by his marginal tax rate.

Here is the calculation:

1. Identify Mr. Tuck's share of the loss: $3,800 / 2 = $1,900
2. Calculate the tax savings: $1,900 * 35% = $665

This means that Mr. Tuck's tax savings from the LLC loss for the year would be $665.