I will forgo the backstory here and keep this simple: I have an LLC that is two years old; it has reported a loss every year. I have three other small investors who own less than five percent of the company each. The LLC return for 2011 is being filed today; the K-1s will all show small losses.

Will the IRS penalize my investors if the K-1 (showing a loss) isn't included on the 2011 return? There has been no change to their capital accounts or anything like that.

Thanks as always for your help!