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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 577
Experience:  10 years experience
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I OWN AN LLC THAT LOOSES A LOT OF MONEY. IT HAS LOST A LOT

Customer Question

I OWN AN LLC THAT LOOSES A LOT OF MONEY. IT HAS LOST A LOT OF MONEY IN THE PAST SO IT HAS A VERY HIGH NEGATIVE BASIS.
i HAVE BEEN TOLD THAT THERE IS A MARKET BY WHICH A COMPANY, OR TRUST THAT HAS EARNED A LOT OF MONEY WOULD BUY MY COMPANY IN ORDER TO OFFSET THEIR EARNINGS.
WAS MY SOURCE ACCURATE OR SCIENCE FICTION??
i APPRECIATE YOUR TIME
tHANK YOU
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

Can you verify HOW that LLC is treated for tax purposes?
If that a single member LLC classified as disregarded entity?
Is that a partnership ? Or the LLC is elected to be treated as a corporation?

Customer: replied 9 months ago.
LLC IS MADE UP OF TEN INVESTORS. WE PURCHASSED A PORTION OF A REAL ESTATE PROPERTY THAT IS DOING HORRIBLY.
Expert:  Lev replied 9 months ago.

So I assume that domestic LLC with at least two members is classified as a partnership for federal income tax purposes.
As such - the LLC files partnership tax return on form 1065 - but the LLC itself is not recognize income or loss - instead all losses are passed to partners and reported on K1 statements - correct?

So - that is for each partner how these losses are treated.
The LLC itself would not deal with losses that are realized.

Thus - if you are a partner - you receive K1 with your portion of losses - and will use it ion your tax return.

You may not transfer such losses to another person or another entity.

If you are looking for the way to sell losses - that woudl not going to happen...

How specifically losses are treated - depends on type of the loss and your specific circumstances.

That might be capital losses, business loss, passive loss, section 1231 loss (from selling business assets) , etc.

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