Read the Ethics question below and provide an answer (min. words 500).
Several years ago, Lou, together with his friend Carlo, opened an Italian restaurant in their neighborhood. The venture was formed as an LLC with Lou receiving a 75 percent ownership interest and Carlo receiving the remaining 25 percent ownership interest. While Lou was primarily responsible for operating the restaurant, Carlo only came in on weekends because he held a full-time job elsewhere. To document the time he spent in the restaurant, Carlo recorded the number of hours he worked in a logbook at the end of every shift. This year, because of a downturn in the local economy, the restaurant showed a loss for the first time ever. To be able to deduct his share of this loss when he files his tax return, Carlo would like to establish that he worked more than 500 hours during the year and is therefore a material participant in the restaurant. His logbook shows that he worked for 502 hours during the year; however, he rounded up to the nearest hour at the end of every shift to simplify his recordkeeping. For example, if he worked four hours and 25 minutes during a shift, he would have written five hours in the logbook. Should Carlo claim that he is a material participant on the basis of the hours recorded in his logbook and deduct his share of the loss? What would you do?