How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask RD Your Own Question

RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
510454
Type Your Tax Question Here...
RD is online now
A new question is answered every 9 seconds

K-1 losses (from a REIT) able to be carried backward

Resolved Question:

If I have K-1 losses (from a REIT) that exceed both my gains and ordinary income in a year, I have heard conflicting answers as to whether or not I can carry the losses backwards vs. income in prior years (this is for myself, and not a company or corporation).  If it is possible, please forward me the relevant links from the IRS so that I can show my accountant.  Perhaps I can find someone on this site that might be interested in being my new accountant! <br /><br />This link also addresses this question: http://www.justanswer.com/questions/2lr9t-if-i-have-k-1-losses-which-will-exceed-my-income-this-year Thanks, XXXXXXXX@XXXXXX.XXX
Submitted: 3 years ago.
Category: Tax
Expert:  RD replied 3 years ago.

RD :

Hi

RD :

Thank You for using Justanswer.

RD :

Inorder to provide you an answer, I would like to get additional information from you.

RD :

How is the K-1 losses reported to you? Is it reported as rental losses or capital losses? which line item on K-1?

Customer :

Hi, thanks for taking the time to help me out. :)

Customer :

hi, I would have to go and look on the specific K-1's....do you want me to run and find them now, or would it be better to e-mail you after looking?

RD :

You can post a reply whenever you are ready with the information.

RD :

I will keep checking.

Customer :

If you give me 60 seconds, I'll know...be right back

Customer :

I have several K-1s (not all REITs), first one here is a loss of 5K on line 1 (ordinary business income), and also line 8 (net short-term capital loss)

Customer :

another K-1 (a REIT) has a loss on line 2 of 15K for "net rental real estate income (loss)"

Customer :

I have a third with losses on line 2 (same as above), and also line 17 for AMT items

Customer :

a fourth separate K-1 has losses on line 8 "net short-term capital loss" and line 11 "other income (loss)"

RD :

Ordinary loss reported on line 1 will be offset against your other income if you are actively involved. Short term capital loss on line will offset your capital gains. Any loss in excess of capital gains will offset your other income upto a maximum of $3000 and balance loss will be carried forward.

Customer :

I work as a trader and investor. I had a very high income for 2008, but I was negative in 2009, and likely will be negative in 2010. The heart of my question is in what circumstances can I carry back K-1 losses to 2008?

RD :

Loss reported on Line 2 is considered passive loss. If actively participate in the management and your adjusted gross income is less than $150,000, you can write off up to $25,000 in rental losses. However, the deduction is subject to phase out. For an adjusted gross income of $100,000 or less, you can write off $25,000 in rental losses. The amount of rental losses that you can write off is proportionately phased out between $100,000 and $150,000.

Customer :

Your response is thorough, yet I am in a weird situation with negative income in both 2009 and 2010. I would like to know how at all possible to carry these losses back against my 2008 income, where I had a huge positive year (and paid full taxes on those gains).

Customer :

Is there a tax law I can use to carry these losses backwards instead of forwards? I unfortunately have negative income for both 2009 and 2010.

Customer :

Are you still there?....The crux of my question is how can I carry these losses BACKWARDS so that I can file an amended return for 2008 and get a refund. Going forward, I am negative in 2009 and 2010, so the tax losses do not help. I am also considering retiring from trading, so the tax credits are far more useful if I can refile them for an amended 2008 return against my large income year in 2008.

Customer :

Your response is thorough, yet I am in a weird situation with negative income in both 2009 and 2010. I would like to know how at all possible to carry these losses back against my 2008 income, where I had a huge positive year (and paid full taxes on those gains).





4:35 PM



Is there a tax law I can use to carry these losses backwards instead of forwards? I unfortunately have negative income for both 2009 and 2010.






4:39 PM



Are you still there?....The crux of my question is how can I carry these losses BACKWARDS so that I can file an amended return for 2008 and get a refund. Going forward, I am negative in 2009 and 2010, so the tax losses do not help. I am also considering retiring from trading, so the tax credits are far more useful if I can refile them for an amended 2008 return against my large income year in 2008.



RD :

Yes,

Customer :

(sorry, we are talking in two chat rooms, I think I initially replied in the wrong one)

RD :

Unfortunately, except net operating loss, other losses such as capital loss or rental loss cannot be carried back.

RD :

However, in case of passive loss- if you dispose off the activity that generated passive loss than such passive loss can be deducted against your other income in the year of disposition.

RD :

Here is a link for your reference.

RD :

http://www.irs.gov/businesses/small/article/0,,id=146336,00.html

Customer :

which types of losses can be carried back (from which line #'s)?

RD :

Losses from line 1 are normally ordinary loss if you are not a passive investor.

RD :

and can be carried back if you do not have sufficient income in the current year.

Customer :

I am a limited partner in these REITs, as well as a limited partner in hedge fund. I fear that in both cases, I would be considered a passive investor, is this true?

RD :

that is correct.

Customer :

and being a passive investor, the losses are unable to be carried backwards? :(

RD :

yes, since these are passive losses and not net operating losses

Customer :

ok....just a few more quick questions (and then I'll click to approve the money send!) :)

Customer :

just to summarize, as a passive investor, there is no way I can carry these losses backwards?

RD :

yes, unfortunately, that is correct.

Customer :

going forward, I read that capital losses can only offset future capital gains (except for 3K a year)...however, K-1 losses will offset future ordinary income such as dividends from CD's, is that correct?

RD :

Yes, you can correct. K-1 losses (which are not reported as capital gains)

RD :

I meant K-1 losses (which are not reported as capital losses)

Customer :

Can you provide me a link to where it says the K-1 losses count against future ordinary income, dividends, etc?

RD :

This will have to be referenced to various sources - first that the k-1 income retains the character of the income as reported, second that a limited partner is not actively involved and hence loss is considered passive loss and third that passive loss can be offset against passive income which is income from such activity or dividends etc.

Customer :

Lastly, do you accept clients? Perhaps you can e-mail me atXXX@XXXXXX.XXX with how much you would charge to do my 2010 return next spring. You seem very knowledgable and excellent.

RD :

I do accept clients but I think such solicitation is not allowed on this website.

RD :

For determining limited partners are passive- see link below

RD :

http://www.irs.gov/publications/p925/ar02.html#en_US_publink1000104565

RD :

I had posted a link earlier regarding passive loss allowed against passive income

Customer :

ok, thanks....but being just an investor in both, and not involved in any management, you are sure that I would be considered passive, and then therefore not eligible for losses to carry backwards?

Customer :

(repaste): ok, thanks....but being just an investor in both, and not involved in any management, you are sure that I would be considered passive, and then therefore not eligible for losses to carry backwards?

RD :

Yes, I am certain

Customer :

ok...you have been extremely helpful...I will approve the money send and give you the highest ratings

Customer :

thank you for your time, I really do appreciate

RD :

I hate to provide negative response to your question but that is how the tax laws are written.

RD :

thanks for using the service and I appreciate your comments and feedback.

Customer :

I understand, and I appreciate the help. It is always better to know.....at least my CDs won't charge taxable interest for many years now! :)

Customer :

I understand, and I appreciate the help. It is always better to know.....at least my CDs won't charge taxable interest for many years now! :)

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and 5 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.