Have a Tax Question? Ask a Tax Expert
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Why would you want to be involved in something that is designed to "operate at a loss indefinitely"?
If there's clearly no profit motive, those losses won't be deductible for income tax purposes.
Land is not depreciable; so their will be no deduction for the cost of the land.
Think of this as a group summer home with planned activities for the kids. Its value added for our lives and we are not interested in running it as a business.
You ask, "Is this allowed"? The answer is yes, but no for income tax purposes.
Then the answer is absolutely, you can do it.
How do you mean "no for income tax purposes"?
When you said you were planning to run it as a summer camp, I thought you meant as a business.
no = not
I heard that it was possible to operate an LLC at a loss only for a limited amount of time.
That is a tax rule.
So, that's not an issue in your case.
...meaning that we would not be able to deduct losses from our personal finances...but we could still operate at a loss,...incurring no taxes other than the annual minimum LLC CA tax fee?
... and property tax of course.
Correct. You would also be able to deduct your share of real estate taxes on your Schedule A.
You will want to make sure that all 30 members of the LLC understand that the losses are not deductible for income tax purposes.
Why? Because the audit of one member could lead to the audit of other members.
Great. Thank you very much. Very helpful.
Thank you. Yes...lots to consider.