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R. Klein, EA
R. Klein, EA, Enrolled Agent
Category: Tax
Satisfied Customers: 3375
Experience:  Over 20 Years experience
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I invested as a limited partner in building a commercial office

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I invested as a limited partner in building a commercial office park. I lost my entire 100,000 dollar capital contribution when it was foreclosed on in 2010. Is that deductible?

Randalltax :

Thank you for your question about this loss.

Randalltax :

Since you were a passive investor (limited partner), your loss of investment is considered a capital loss.

Randalltax :

You may show this loss on your 2010 return when the loss was first evidenced as a total loss by the foreclosure process.

Randalltax :

Because this is a capital loss, you may use it to first offset any capital gains. In addition, you can deduct an additional $3,000 per year.

Randalltax :

Assuming you cannot use the entire loss in 2010, the unused portion carries forward to be used in 2011. Again, it first offsets your capital gains, then up to $3,000 additional loss can be used to offset ordinary income. Anything left over, and the process continues to carry forward.

Randalltax :

If you never have any capital gains, you will use this loss up by your 34th year (at $3K per year).'

Customer:

Do I need to amend 2010 and 2011

Randalltax :

Yes. If you do not amend 2010, the loss cannot be recognized. It must be started in the year the loss is permanent and total.

Customer:

Thank you

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