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I am a partner in an LLC. I will receive a distribution of

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I am a partner in...
I am a partner in an LLC. I will receive a distribution of net profit from the LLC of roughly $150K in 2015. I have a loss carryforward on my personal taxes of $650K from a various businesses or investments gone bad. Is the LLC distribution considered regular income or a dividend that I can offset with part of my loss carry forward?
Submitted: 2 years ago.Category: Tax
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6/24/2015
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,723
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to our site!When the LLC that is taxed as a partnership realized a profit - that profit is passed to partners on K1 and is taxable REGARDLESS if distributed or not.That woudl be your regular income and if you have NOL carried from other tax years - it may be used to offset that income.The distribution itself - is not taxable - but will reduce your basis in the partnership interest.The distribution becomes taxable ONLY after the basis is reduced to zero.
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Tax Professional: Lev, Tax Advisor replied 2 years ago
To be precised with the character of taxable income - we need to look into schedule K1 - as that income is passed from the partnership LLC.So - on your personal tax return - you woudl have same treatment.
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Tax Professional: Lev, Tax Advisor replied 2 years ago
You mentioned - I have a loss carryforward on my personal taxes of $650K from a various businesses or investments gone bad.
.
We need to be clear how these losses are reflected on your tax return.
We need to differentiate
- capital loss - that may be used to offset capital gains only and up to $3000 may be used to offset other types of taxable income.
- passive losses - that may be used to offset only passive income
- business loss that will generate NOL - net capital loss - for the year such loss occurred - such NOL is generally carried back for two years - and the rest is carried forward.
So - we need better understanding HOW these various businesses or investments losses are reflected on your tax return.
Then - we need to analyse how that LLC profit is reported on your K1 - specifically - in which boxes and which amounts are reported - that will give us direction for tax treatment of these items on your individual tax return.
I will help you with specific items as needed.
But generally - yes - if you have NOL carried forward from previous years - that NOL may be used to offset your current year taxable income.
Please let me know if you need any help with reporting.
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Lev
Lev
Lev, Tax Advisor
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