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Thinking about switching our LLC that was taxed as a sole…

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Thinking about switching our...

Thinking about switching our LLC that was taxed as a sole proprietorship to an LLC taxed as a partnership, but have prior year net losses that we want to use. Can the partnership use the losses from the sole proprietorship if it's the same LLC?

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Thinking about switching our LLC that was taxed as a sole proprietorship to an LLC taxed as a partnership, but have prior year net losses that we want to use. Can the partnership use the losses from the sole proprietorship if it's the same LLC?

Submitted: 4 months ago.Category: Tax
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Customer reply replied 4 months ago
If we can use the prior year losses, where to we put those on the partnership return or individual returns?
Answered in 16 minutes by:
3/19/2018
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago
PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 5,087
Experience: 35 years tax experience, including four years at a Big 4 firm.
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Hi from Just Answer. I'mCustomer and can assist.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

The prior year losses would have been used by the owner last year. There should not be any losses at the partnership level.

Most sole proprietors can fully deduct their business losses in the year incurred. Can you confirm that the losses were not used, and why? I can then explain my answer in more detail.

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Customer reply replied 4 months ago
The business started in 2011 as a single member, LLC of my boyfriend. On 1/1/2017, he transferred 50% of the business to me, converting it from a sole proprietorship to a partnership. There has been a net operating loss every year until last year. Last year was the first year that the business showed a profit. He still has net operating losses from prior years that can be carried forward, but I'm not sure how to do that since it's now a partnership and not an LLC
Customer reply replied 4 months ago
I meant not a single member LLC
Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

His losses are personal net operating losses, and do not affect your partnership at all. Those losses are his personally (they are passed thorough to him in the year of loss and stay with him).

The partnership 1065 return will rep[ort the income to each of you. He will be able to offset his income with his net operating loss carryover, if he handled that correctly.

Personal net operating losses have to be carried back to the two prior years, with any excess being carried forward. Or, if he elected, the prior year losses would be only carried forward. That would be an IRC 172(b)(3) election, and would be the last page of his 2016 1040.

I'll try the phone call offer again, as I see payment was not processed.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

phone call offer not available, since you made a request for one.

Please rate to complete your request.

Customer/p>
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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 4 months ago

I tried to make a phone call offer, but can't. Site rules don't allow me to make that offer after you already tried.

Customer/p>
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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 3 months ago

See my phone offer to assist.

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Tax Professional: PDtax, Certified Public Accountant (CPA) replied 3 months ago

sorry, phone call offer isn't working on my end.

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