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?© BrainMass Inc. brainmass.com March 4, 2021, 8:00 pm ad1c9bdddf
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 ...
This solution calculates how losses affect taxable income for Lucille and Mabel. Additionally, two references are provided for further research on the subject.