IRS eases on Passive Loss Tests for Limited Partners and LLC Owners!
A recent ruling has the IRS easing the passive loss tests for limited partners and LLC owners. The IRS in proposed rules states that "the losses to both Limited Partners and LLC owners are that these "losses aren’t presumptive."
This apparently was a result of the IRS losing in court. Limited partners or LLC owners who have some management rights can find some relief in "avoiding passive loss treatment" by showing the IRS that they meet one of the seven standard tests for material participation.
The implication of this ruling is that "this relief should enable more limited partners and LLC members to deduct their losses in the activity as Non-Passive."