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    Sole Proprietorship and C Corporation

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    Lucille owns a sole proprietorship and Mabel is the sole shareholder of a C corporation. Each business sustained a $20,000 loss and a $7,000 capital loss for the year. How will these losses affect the taxable income of the two owners when they file their individual income tax returns?

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    Lucille -Sole Proprietorship
    A business loss of $20k can be carried forward up to seven years and can be adjusted for business income.
    So, $7k capital loss can be adjusted against the capital gain, or she can carry forward the amount and deduct $3k every year (up ...

    Solution Summary

    This solution calculates how losses affect taxable income for Lucille and Mabel. Additionally, two references are provided for further research on the subject.