Question

d. If both Ray and Chuck are single and Ray has a current-year loss of $21,000 from a sole proprietorship, how much trade or business loss can each deduct on their tax return

Answer 1

The business loss that Ray incurred from his sole proprietorship does not affect Chuck his business partner in a partnership.

So, Ray is entitled to deduct the loss of $21,000 from his other income as he prepares the IRS forms. We assume that his partnership business with Chuck produced a profit, so Ray can deduct the loss from his partnership income.

Step-by-step explanation:

The IRS allows Ray to deduct the $21,000 sole proprietorship loss on Form 1040 against any other income he has such as salary, investment, partnership, or S corporation income.