Capital Gains and Losses

Capital Gains Tax Questions? Ask a Tax Advisor for Answers ASAP

Ask an Expert,
Get an Answer ASAP!

Capital Gains and Losses

1. Client sold a (passive) investment partnership interest

Customer Question
1. Client sold a (passive) investment...
1. Client sold a (passive) investment partnership interest for a $1MM+ gain (No issues re: “hot”/ord. assets, suspended losses, basis/at-risk).
2. Client also has rental real estate with over $1MM of cumulative passive losses on Form 8582.
QUES: Can the (Long-term) capital gain from the sale of the partnership interest be offset by his cumulative passive losses on rental real estate?
Obviously a Long-term sale of IBM stock cannot, but the sale of an interest in a passive investment partnership? I maybe overthinking the obvious answer here given scale.
Thank you!
Submitted: 1 year ago.Category: Capital Gains and Losses
Show More
Show Less
Ask Your Own Capital Gains and Losses Question
Answered in 7 minutes by:
10/11/2016
Tax Expert: Mark Taylor, Certified Public Accountant replied 1 year ago
Mark Taylor
Mark Taylor, Certified Public Accountant
Category: Capital Gains and Losses
Satisfied Customers: 2,391
Experience: Certified Public Accountant
Verified

Hi, my name is Mark. I will be happy to help you with your questions. Unfortunately the long-term loss from the capital gain generated from the sale would be able to offset the Passive Activity Loss. Is this a 2015 return? Is it possible to sell one of the investment with passive losses to be able to apply these to the gain?

Ask Your Own Capital Gains and Losses Question
Customer reply replied 1 year ago
Thanks Mark! Not sure I understand your response: The sale of the partnership interest was a GAIN, not a loss. The cumulative losses are on rental real estate, none of which were sold in 2015. You also noted "Unfortunately....would be able to offset the Passive Activity Loss", which is a good thing? Just want to be sure I understand your answer. The two elements, once more:
1. Client sold a (passive) investment partnership interest for a $1MM+ (LT capital) gain (No issues re: “hot”/ord. assets, suspended losses, basis/at-risk).
2. Client also has (unsold) rental real estate with over $1MM of cumulative passive losses on Form 8582.
THUS: Can the capital gain from the sale of the partnership interest be offset by his passive losses by rental real estate losses?
Obviously a Long-term sale of IBM stock cannot, but the sale of an interest in a passive investment partnership? I maybe overthinking the obvious answer here given scale.
Tax Expert: Mark Taylor, Certified Public Accountant replied 1 year ago

Brian,

As I understood your question the client has suspended passive losses. The capital gain from the sale of the partnership interest cannot by offset by the suspended losses. You would need to have passive income or sell the passive activity to be able to utilize these losses.

Ask Your Own Capital Gains and Losses Question
Customer reply replied 1 year ago
Thanks Mark!!
In general, capital gains--such as a gain on IBM stock--cannot be offset by accumulated passive losses on rental real estate. But is a capital gain on the sale of a partnership interest treated differently given that it is from a passive activity?Reg. § 1.469-2T(c)(2)(i)(A)(2): Gain on disposition generally is passive income if the activity was a passive activity in the year of disposition.The fact that an activity is passive does not determine the character of the gain (or loss) in terms of whether it is capital or ordinary in nature. Gain on disposition, usually capital in nature, will be reflected on Form 4797 and Schedule D.So unless these trigger a revelation for you, I'll accept that this a capital gain which CANNOT be offset by cumulative passive losses from rental real estate.
Tax Expert: Mark Taylor, Certified Public Accountant replied 1 year ago

That is the way I interpret it as well. Since the gain will be reported as capital (reflected on schedule D or Form 4797), it cannot be used to offset the suspended passive losses.

Ask Your Own Capital Gains and Losses Question
Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor
Mark Taylor, Certified Public Accountant
Category: Capital Gains and Losses
Satisfied Customers: 2,391
2,391 Satisfied Customers
Experience: Certified Public Accountant

Mark Taylor is online now

A new question is answered every 9 seconds

How JustAnswer works:

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

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.WMatteson, 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.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, 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.

OrvilleHesperia, 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!!!!

AlexLos 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.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

R. Klein, EA

R. Klein, EA

Enrolled Agent

263 satisfied customers

Over 20 Years experience in resolving tough tax cases

jgordosea

jgordosea

Enrolled Agent

173 satisfied customers

As an Enrolled Agent you can be ensured of my competence in income tax matters.

PhillipB EA

PhillipB EA

Accountant

130 satisfied customers

Enrolled Agent with 8 years experience in tax return preparation, representation, and taxpayer consultation

Arthur Rubin

Arthur Rubin

Tax Preparer

72 satisfied customers

Over 22 years of tax preparation experience.

Bill-the-CPA

Bill-the-CPA

Certified Public Accountant (CPA)

55 satisfied customers

Seasoned professional with over 15 years in public accounting. Income, sales and property tax. Also accounting/tax software.

FredStevens

FredStevens

Accountant

37 satisfied customers

Experienced in business, accounting and tax planning for individuals, small/medium sized businesses and non-profit organizations

Shane-CPA

Shane-CPA

CPA, PFS, CGMA

11 satisfied customers

Shane Northrop is a Certified Public Accountant, Personal Financial Specialist and a Chartered Global Management Accountant

< Previous | Next >

Related Capital Gains and Losses Questions
I'm trying to plan out what would be the most tax advanteous
Hi, I'm trying to plan out what would be the most tax advanteous thing to do with my in-laws' home when they pass away. They purchased this home decades ago for about $25K and it's now worth about $50… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I want to open a commercial account at brokerage firm to
i want to open a commercial account at brokerage firm to avoid paying taxes on capital gain unless i withdraw money....is it possible or it wont make a difference=will work as same as on personal acco… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
IS there a way to offset capital gains taxes from a business
IS there a way to offset capital gains taxes from a business loss on a K1. … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Regarding the new tax law changes and lower tax table rates.
Regarding the new tax law changes and lower tax table rates. They lowered Corporate tax rates. Does that apply only to "C" Corps? Does it Not apply to "S" Corps because S Corp net income flows through… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,797 satisfied customers
Do you know if capital gains will be included as income
Hello, do you know if capital gains will be included as income regarding the new 20% deduction on pass thru ( k-1 pass through capital gain from the sale of s-Corp asset ,line 17 of the k-1 that puts … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
If i own ripple thru bitstamp do i have to pay capital gains
if i own ripple thru bitstamp do i have to pay capital gains in luxemburg and the US? … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I sold a business in California with real estate on July 6,
I sold a business in California with real estate on July 6, 2017. We entered into a 1031, and were not able to complete. Funds were released to us jan 5, 2018 after 180 days. California tax 3.33% has … read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
On an executed contract for 200k for a condo that will be
On an executed contract for 200k for a condo that will be 2nd home, sold furnished, seller is proposing to drop price by 10k and ad 10k in furniture. If done, I know all parties will pay less doc stam… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
How should i determine the FMV in USD of my coin-coin crypto
how should i determine the FMV in USD of my coin-coin crypto currency trades for capital gains calculations? If I buy bitcoin for the sole purpose of acquiring another crypto asset, but by the time I … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
My mother died in 1989. She had interest in a 100 ac farm
My mother died in 1989. She had interest in a 100 ac farm land with other family memebers. In 2016 the family was forced to sell the property due to health reasons of my mothers sister who lived and m… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My mothers will was not probated until November 9, 2016. Why
my mothers will was not probated until November 9, 2016. Why wouldn't my basis be the appraised value of the land when I received interest. I was unaware I had any interest until 2016. The property wa… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
THE BASIS WAS 9900 APPRAISED VALUE IN 1989 WITH
THE BASIS WAS 9900 APPRAISED VALUE IN 1989 WITH APPROXIMATELYL 5000 IN ADDIITONAL COST. I FIGURED THE GAINS TO BE 247, 177. iM MARRIED FILING JOINTLY. My taxble income for 2017 is around 69000. I have… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Thank you for your previous answers. New question:, a
Thank you for your previous answers. New question: John, a married man, wishes to gift, say, 12M to his children. Can he under the new tax law make that gift tax free, utilizing 2M of his wifes 10M ex… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
My husband and I sold our house for 400k. Do we have to
My husband and I sold our house for 400k. Do we have to report this to the irs … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I worked for a UK branch of a large US company and received
I worked for a UK branch of a large US company and received shares through RSU vesting as part of my salary. My question is about working out CGT of RSUs received from the company. I have chosen some … read more
taxmanrog
taxmanrog
Master\u0027s Degree
772 satisfied customers
Can you avoid capital gain tax on a home your parents quit
can you avoid capital gain tax on a home your parents quit claimed to you if it is your personal residence and you have lived there for two years? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,068 satisfied customers
You did an analysis of taxes due when I sell my California
Hi, You did an analysis of taxes due when I sell my California house for us several months ago. I would like to run a couple of more scenarios. I would like to know what tax I would owe for the follow… read more
Mark Taylor
Mark Taylor
Certified Public Accountant
2,391 satisfied customers
Thank you. What is the new law with respect to estate taxes?
Thank you. What is the new law with respect to estate taxes? Does the exemption expire in a few years? Is there a change in situtation for couples w/r/t estate taxes? If an individual gifts the maximu… read more
TaxRobin
TaxRobin
Vocational, Technical or Trade School
1 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x