In 2018, Joanne invested $90,000 for a 20% interest in a limited liability company (LLC) in which she is a material participant. The LLC reported losses of $340,000 in 2018 and $180,000 in 2019. Joanne's share of the LLC's losses was $68,000 in 2018 and $36,000 in 2019. How much of these losses can Joanne deduct?
A) $68,000 in 2018? $36,000 in 2019.
B) $68,000 in 2018? $22,000 in 2019.
C) $0 in 2018? $0 in 2019.
D) $68,000 in 2018? $0 in 2019.
E) None of the above.

Question

Quizplus · Accepted Answer

Joanne can deduct up to her basis in the LLC. She invested $90,000, so she can deduct $68,000 in 2018 and the remaining $22,000 in 2019, as her basis is reduced by the losses.

In 2018, Joanne Invested $90,000 for a 20% Interest in a Limited