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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15732
Experience:  15years with H & R Block. Divisional leader, Instructor
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In a pass through LLC that is operating as a loss, can the

Customer Question

In a pass through LLC that is operating as a loss, can the members claim their portion of that loss on their taxes? If so what are the limitations? IE time, amount etc.


Submitted: 4 years ago.
Category: Tax
Expert:  Robin D. replied 4 years ago.

Robin D :

Hello and thank you for using Just Answer,
If the LLC is a partnership or an S corp and the partner or member has sufficient basis in the ownership interest, then they can use the loss on their personal return.
If the losses are not passive then they are used against other income.
Under the Internal Revenue Code, a limited partner's interest in a limited partnership is by default deemed to be an interest in which the taxpayer does not materially participate. This would make the losses limited and passive.
A passive activity is defined as an activity which involves the conduct of any trade of business in which the taxpayer does not materially participate; if there is material participation from the taxpayer, it is considered non-passive.
In short, the answer depends on the LLC and then the participation for the losses to be used against other income on the personal return.

Robin D :

This subject is not simple and you would want to work with your personal tax professional on claiming any loss.