How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Anne Your Own Question
Anne, Master Tax Preparer
Category: Tax
Satisfied Customers: 2439
Experience:  Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
Type Your Tax Question Here...
Anne is online now
A new question is answered every 9 seconds

I started a business this year, an LLC, with 2 of my

Customer Question

I started a business this year, an LLC, with 2 of my sisters. I have invested $2,000 of my own dollars into it. Do I get to write this off? Is there special forms to fill out on my personal taxes for this?
Submitted: 1 year ago.
Category: Tax
Expert:  Anne replied 1 year ago.


I'm Anne I've been preparing taxes for 27 years and I'll be happy to help you.

The question of whether or not you may write off the whole $2000 depends on a couple of things.

First, I'm assuming that you and your sisters have set up this business as a Partnership (Form 1065). If this is true, then if you don't work for the Partnership (meaning you were JUST an investor), AND the Partnership itself lost money this year, then you MAY qualify to take the full $2000.

I say MAY because again, I don't know if you are actually working in this business or if you are just an investor....also I don't know if only 1 of your sisters is working for the business, and the other sister is also just an investor.

You should receive a K1 from whoever prepares the Partnership tax return that you will include in your personal tax return.

If you have any questions, please post them here and I'll be notified

If this answers your question, then please take the moment to rate positive by clicking on the stars

It is ONLY through positive feedback that we are compensated for our time and knowledge.

Thank you for choosing justanswer.

Customer: replied 1 year ago.
The 3 of us invested, and the three of us are all working partners, but we haven't paid ourselves anything yet, we've only put in our time and invested our money. Does that help you give a clearer answer?
Expert:  Anne replied 1 year ago.

Yes, thank you

Since you are all 3 working the business, then whatever profits or losses the partnership incurs is split between the 3 of you depending on the % of ownership as set forth in the Partnership agreement. (Although equal ownership between the 3 of you is the most common method I see, it's also not uncommon to split the partnership ownership via investment $)

You may choose to take "owner's equity" as payment , assuming the Partnership has the money . You will want to talk to whoever is preparing the Partnership return.

If you do not recoup your investment in the first year , then it is carried over to future years, so you don't lose it.

I hope this helps.