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Old 03-01-2015, 02:42 PM
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LLC Non-Passive loss

Sorry, I neglected to state that the company is a LLC in which we have a 2012 Non-passive loss which by declaring throws us into a NOL which does not contribute any thing to our tax situation. We owe zero taxes without its loss. Want to suspent the loss until we have income from the company. Our participation is less than 500 hours but we perform some duties that the other partners don't(EXAMPLE-cost analysis, job description reviews) The company is out of state and run by a managing partner. In reading Pub. 525 is seems we have some significant participation that could qualify as passive. If so, couldn't we put the loss down as passive and carry the loss forward under "passive-loss limits"? If this is possible do I file a 1040X for 2012, to remove the NOL? Where do I list the significant participant passive actity going forward. Does it go under schedule E, line 28,column f? Thank you



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Old 03-01-2015, 09:01 PM
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Originally Posted by jahh View Post
Sorry, I neglected to state that the company is a LLC in which we have a 2012 Non-passive loss which by declaring throws us into a NOL which does not contribute any thing to our tax situation. We owe zero taxes without its loss. Want to suspent the loss until we have income from the company. Our participation is less than 500 hours but we perform some duties that the other partners don't(EXAMPLE-cost analysis, job description reviews) The company is out of state and run by a managing partner. In reading Pub. 525 is seems we have some significant participation that could qualify as passive. If so, couldn't we put the loss down as passive and carry the loss forward under "passive-loss limits"? If this is possible do I file a 1040X for 2012, to remove the NOL? Where do I list the significant participant passive actity going forward. Does it go under schedule E, line 28,column f? Thank you
I guess it is NOT passive losslimits;to carry forward your NOL, you need to file form 1040X as you can’t file form 1045 for 2012 that had to be filed by Dec 31 2012 to carry back 2012 NOL back to 2010/2011. this opinion may be helpful; for the taxpayer, the first question the court considers is whether to treat the taxpayer as a limited partner or a general partner. The IRS had argued that all members of an LLC were shielded from liability and, therefore, were limited partners. The court rejected this argument, noting that a limited partnership has at least one general partner subject to liability whereas no LLC members are subject to liability. In addition, limited partners have limited rights in management whereas LLCs are designed to permit all members to be active in management. Therefore, the court concluded LLC members who are active in the business should be considered general partners for passive loss purposes. Another issue was how to compute the number of hours a taxpayer needed to work to be considered as having materially participated in the business. Under temporary regulations section , a taxpayer is actively involved in a business if he or she works more than 500 hours in the business during the year. The regulations specify that a taxpayer must work for at least 500 hours to be considered active. However, the court permitted grouping multiple businesses to determine material participation.

When completing Sch E page 2 of Form 1040, for Sch E of Form 1040, for non-passive income or loss (and passive losses for which you are not filing Form 8582), you need to enter in the applicable column of line 28, your current year ordinary income or loss from the partnership.you need to report each related item in the applicable column of a separate line following the line on which you reported the current year ordinary income or loss.



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