dvising for Potential Tax Loss Abe is an entrepreneur who li

dvising for Potential Tax Loss Abe is an entrepreneur who likes to be actively involved in his business ventures. He is business that he projects will produce a tax I consumers become aware of the new product being sold by the business and the quality of the service it provides he is confident the business will generate a proft of at least $125.000 per year. Abe has substantial other income (from both business ventures and investment activities) each year. Advise Abe on the business form he for the short run. He will be the sole owner going to invest $500,000 in a per year in the short run. However, once should select

Solution

Tax losses cannot be carry forward by individual ie in sole proprietary so he can establish a partnership with his partners may be wife or friends acting as sleeping partners and Abe actively undertaking all business activities, and further all the tax losses in short run can be carried forwarded and can be set-off with future expected profit of 125000. And also the profit distributed by the firm is tax free for individual Abe in his return ,, so he will be liable for tax on other investments and salary from firm if any..