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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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This year I had significant loss. Can this loss be compensated

Customer Question

This year I had significant loss. Can this loss be compensated by taxes which was paid wthin the last few years
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Generally - yes - the loss may be used to offset your taxable income,

however - there might be some limitations depending on the type of the loss.

 

What type of loss did you have?

  • was that a loss from your business?
  • loss from the sale of a capital property?
  • loss from rental activity?
  • casualty or theft loss ?
  • any other - please specify?

 

Lev and 2 other Tax Specialists are ready to help you
Customer: replied 7 years ago.
More specifically, this year I had over $10,000 loss from a real estate deal. In 2005 I had $50,000 gain in the same investment. Can I recover my loss this year from the overpayment in 2005?
Expert:  Lev replied 7 years ago.

It is still not clear what type of loss you have...

Did you sell real estate for less than a basis - and have a capital loss?

Or you are in the real estate business and have a business loss?

 

Please clarify and provide more information about your situation.

Customer: replied 7 years ago.
I am an investor in a construction company. I've made profit in 2005 and loss in 2008
Expert:  Lev replied 7 years ago.

As an investor and a shareholder of the construction company - you should receive the schedule K-1 that identifies the type of loss.

Please specify - if the construction company organized as S-corporation , C-corporation or a partnership?

In which box of the schedule K-1 the loss is reported?

 

I am still unclear on the type of loss.

 

Customer: replied 7 years ago.
It is an S corporation. The loss was in the corporation expenses. The gain in 2005 was corporation profit. Yes, I have K1 form for both. My question again is that can I compensate my 2008 loss from the 2005 payment?
Expert:  Lev replied 7 years ago.

So - you had a loss from S-corporation reported to you on the schedule K-1 - http://www.irs.gov/pub/irs-pdf/f1120ssk.pdf - box 1 as Ordinary business loss.

 

You may not carry such loss backward and apply to your 2005 income.

You can only deduct an S corporation loss to the extent of basis you have in the S-corporation, or in direct loans to the S-corporation. The loss above that limit is not deductible to you.

 

As you are an investor and not an active participant in S-corporation activities - the loss is deductible only to the extent of your other passive activity income and is subject of "passive loss" limitations.

 

Let me know if you need any help.