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Question

I have invested in several oil and gas joint ventures (independent producers). Since income will not be coming in until next year I will have losses this year. It looks like I cannot generate enough income to offset all of the losses. I have generally elected to be a general partner with automatic conversion to limited after the first year. I have the income going into a single member LLC (disregarded entity).
For estimates for 2009, let say my total income included an IRA distribution will be $150,000. My investments in Oil and Gas could reach $250,000. Confused investor.

Submitted: 62 days and 7 hours ago.
Category: Tax
Value: $30
Status: CLOSED
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Country/State/Province of question: Miami, Fl.

Already Tried:
On line inquiries. Never seems to answer if you have more than you can use in one year for IDC etc.

Posted by Mark D 62 days and 7 hours ago.

Info Request

XXXXXXXXXX,

Thank you for using JustAnswer. Did you have a particular question?

Regards,

XXXX X

62 days and 7 hours ago.

Reply

What additional information do you need?

62 days and 7 hours ago.

Reply

I have deposit and paid in the total investments of approximately $250,000 into 6 different joint ventures.

 

Accepted Answer

XXXXXXXXXX,

Generally, a loss reported on Schedule C (since a SMLLC) in excess of income would generate a Net Operating Loss (NOL). You can carry back this loss up to five years and claim a refund for previously paid taxes, or you can elect to carry the loss forward to offset future income. Please be advised the IRS allows for a non-passive loss for a working interest in oil & gas drilling only when the investment is not held in an entity that limits the taxpayer's liability. Generally, you would want to keep the investment outside of the LLC in the first year and then contribute it the next year to avoid this rule. After doing so, all future income would still be subject to Self Employment tax. Please let me know if you have further questions.

Regards,

XXXX X

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Expert: Mark D
Pos. Feedback: 99.6 %
Accepts: 
Answered: 9/21/2009

Tax Preparer

MBA, CTEC Registered, CPA Firm Experience with Business and Individual Tax Returns and Issues

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