Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

What happens if I own Preferred Shares in a listed company…

Customer Question
What happens if I...

What happens if I own Preferred Shares in a listed company and it reports s a massive loss in box 10 of my K-1 and then it goes backrupt in the same year and I am left with nothing?

Submitted: 3 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 2 hours by:
3/30/2018
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 3 months ago
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,184
Experience: Former IRS Revenue Agent
Verified

I'm Fiona, former IRS revenue agent. I am looking at your question and will get back to you soon. Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP,IMTA

Ask Your Own Tax Question
Customer reply replied 3 months ago
Can this huge loss be carried over multiple years?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 3 months ago

Dear Customer,

You report the loss from K-1 to your Form 1040. That is the business operation loss. The loss will show up, depending on the various items, possibly on line 17, as regular income loss. I saw your second posting. If this loss creates for you net operating loss, it can be carried back to prior years and forward to future years.

As to your investment loss, that is reported on Schedule D of your Form 1040 using Form 8949. You report your initial purchase date [investment date], cost and proceeds probably is $0 and date of sale [date the company filed bankruptcy.] Then, you have a schedule D, short term capital loss [in the same year?] Capital loss shows up on line 13 is subject to (-3000) net loss per year.

Please verify with a CPA locally to make sure this is correct in your case if the number of loss is large.

If the company filed bankruptcy, you should file with the bankruptcy court to make sure that you can get as much of recovery as possible.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 3 months ago
Well, this loss in box 10 is about 10x my reported income for 2017 - generating a tax refund. Is this correct?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 3 months ago

Dear Customer,

Incorrect.

Refund is in between of what we have given the government during the year via withholding and estimated tax payment and what tax we actually owed on our tax return.

Therefore, even if we have lost our shirt due to a business operation, the government will not give us money because of that.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 3 months ago
Is this part of my adjusted gross income?
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 3 months ago

Dear Customer,

Yes.

It is suggested that you find professional help in this year's tax return preparation. Corporations have preferred stock. Corporations don't have K-1s. If K-1 line 10 has loss, this company or partnership is claiming huge loss in business property, section 1231? You want to consult with a professional to give you some discussion and background on what happened. Something does not seem right, at all.

Regards,

Fiona

Ask Your Own Tax Question
Customer reply replied 3 months ago
The company was a limited partnership that was also a plublicly listed company. I am just concerned because this huge loss changes my adjusted gross income to - negative.
Tax Professional: Dr. Fiona Chen, Certified Public Accountant (CPA) replied 3 months ago

Dear Customer,

Theoretically speaking this can happen. It is because Section 1231 loss can by pass schedule D for capital loss or passive activity loss and be taxed as regular income and loss.

However, the condition for this to happen on your tax return has to be that you own a lot of the shares and got a lot of loss and you earn or have very little income in comparison. For a public traded partnership and an individual person preparing a Form 1040, this combination is almost impossible.

How should we proceed with your question? Are you satisfied with my answer to give me a five star rating??

You need to have some one really look at this K-1 interview you and read all the attachments of this K-1 and to compare with your tax return.

How much 1231 section loss you got? Are you sure that all the loss belong to you personally as for the percentage of shares you own? This company probably helped you more in its bankruptcy than in its operation.

Regards,

Fiona

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Dr. Fiona Chen Your Own Question
Dr. Fiona Chen
Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1,184
1,184 Satisfied Customers
Experience: Former IRS Revenue Agent

Dr. Fiona Chen is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
My technology startup business is a S-corp with 3 original
HI, My technology startup business is a S-corp with 3 original co-founders out of which 2 left after sometime in the company. So in returns for 2016, I chose K1 as final for those 2 partners assuming … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I had a distribution from my mother's estate in 2017. I have
I had a distribution from my mother's estate in 2017. I have a form Schedule K-1 (Form 1041 2016. I did not see where this information regarding income and excess deductions are listed … read more
Dr. Arthur Rubin
Dr. Arthur Rubin
Doctoral Degree
173 satisfied customers
I received a 2016 K-1 from Vanguard Natural Resources LLC
I received a 2016 K-1 from Vanguard Natural Resources LLC Series B Preferred Units noting a $7323 Amt in Guarantee payments K 1 Part III Box 4. I never received the payment. VNR went to bankruptcy. Ho… read more
Dr. Fiona Chen
Dr. Fiona Chen
Certified Public Accountant (CPA)
Ph.D.
1,184 satisfied customers
I am preparing 1040 that have a k-1 from his S Corp which is
I am preparing 1040 that have a k-1 from his S Corp which is showing the following: … read more
Mark Taylor
Mark Taylor
Certified Public Accountant
Masters
2,328 satisfied customers
I am looking for a tax professional with state of Florida
I am looking for a tax professional with state of Florida knowlege. I purchased my business partners 50% share on september of 2016. My partner is asking for a k1. My accountant says that my partner d… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
My husband and I are 50% (500 shares each) shareholders of
My husband and I are 50% (500 shares each) shareholders of an S corporation. He passed away in August 2015, I am late getting my S corp return filed (due 9/15/16) and I am the only beneficiary of our … read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
I received both a cash inheritance and an IRA inheritance from
I received both a cash inheritance and an IRA inheritance from my deceased aunt. I have the IRA paperwork taken care of but not the cash inheritance. The executor sent me a1099 with an amount that was… read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
15,569 satisfied customers
My wife and I own a partnership. We are 50/50 partners. I do
My wife and I own a partnership. We are 50/50 partners. I do 99% of the work in the partnership. Can I change her from a 50% partner to a 10% partner to save on self employment taxes when we file our … read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,134 satisfied customers
How to change S-Corporations Ownership Percentage I have
How to change S-Corporation's Ownership Percentage I have an LLC taxes as an S-corporation. When filing taxes using 1120S and when distributing K1 Worksheets, I must indicate each owner's Ownership %.… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,134 satisfied customers
I was hired and given 5% partnership of a business a friend
I was hired and given 5% partnership of a business a friend started. I am managing the business. The Attorney wants the 2553 form or the 8832 form back for filing. I want to ensure I protect myself wi… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
Are cash contributions to S-corporation MUST be in proportion
Are cash contributions to S-corporation MUST be in proportion to the ownership percentage between 2 shareholders? How it will affect taxes? What about owner distributions - they also must be in propor… read more
Lane
Lane
JD, MBA, CFP, CRPS
Doctoral Degree
47 satisfied customers
I have a single-member LLC that I am going to elect S-Corp
I have a single-member LLC that I am going to elect S-Corp status on for 2014. Right now on my books my equity accounts are as follows... Owner's Draw - $0 (closed out every year to Owner's Equity) Ow… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,134 satisfied customers
I am preparing a 1065 - Among 6 of the members , I need help
I am preparing a 1065 - Among 6 of the members , I need help with 2 of the members -2 couples have their ownership and MR & Mrs as tenants by the entirety. I know that each spouse of both couples will… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,134 satisfied customers
I had a S Corp loss - am the sole shareholder and my equity
I had a S Corp loss - am the sole shareholder and my equity and retained earnings exceed the loss amount. How do I treat this in the AMT calculations? Basically, I need to see how I reduce the taxable… read more
Jax Tax
Jax Tax
Senior Tax Attorney
Master\u0027s Degree
1,394 satisfied customers
i owned shares in a publicly traded partnership that
hello, i owned shares in a publicly traded partnership that paid distributions, purchased in 2008 & sold a portion with a short-term gain in 2009, and the rest in 2010 w/ a short term loss. i did not … read more
CGCPA
CGCPA
Owner
Bachelor\u0027s Degree
3,815 satisfied customers
Mr. Rubin, I had asked you a question several months ago about
Mr. Rubin, I had asked you a question several months ago about reporting a S-corp buyout payment of $47,500 for my husband's share of his company. For some reason, neither our lawyer nor the company' … read more
Dr. Arthur Rubin
Dr. Arthur Rubin
Doctoral Degree
173 satisfied customers
I am a partner in an LLC. I invested a big sum of money. It
I am a partner in an LLC. I invested a big sum of money. It does not appear like I will be getting my money back. Can I take it as a tax deduction on my 2008 tax return?… read more
Lev
Lev
Retired
Bachelor\u0027s Degree Equivalent
27,134 satisfied customers
Hi, I recvd a 5% stake in a private start-up company (S-corp)
Hi, I recv'd a 5% stake in a private start-up company (S-corp) in exchange for intellectual property (which I valued at 25k). The actual book value of my stake is listed as only 5k. I just recv'd a K-… read more
Ed Johnson
Ed Johnson
Senior HR Consultant and Business Devlpm
Bachelor's Degree
6,994 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x