Can anyone point me in the right direction. I have a client who is in a partnership that is winding down. It currently has about 100,000 dollars in passive losses. When are these passive losses able to be taken? Do they all have to be taken in the same year? I couldn't find anything in the taxbook.
-
-
I think they are taken in the year the partnership interest is sold. Don't have a reference for you and haven't dealt with this in a long time but that is what I think I remember.
At least this keeps it near the top and maybe someone will have more of an answer for you.
Linda, EA -
Thanks
Linda,
I think the losses can only be taken in the year the partnership is terminated. I was hoping not though. Anyone have advice.Comment
-
The PAL audit technique guide discusses this issue briefly http://www.irs.gov/businesses/small/...146336,00.html. I suppose if there was a NOL you could carry the loss back/forward accordingly, otherwise I don't see a way for you to take the losses in any year other than the year they dispose of all interest in the activity.MichaelComment
-
Going out of business
Would just going out of business meet the test of unrelated party? She is not selling the business, it just went under. So it appears this will just allow her to pay no tax at all in the year the partnership finally terminates considering she has about 50,000 in passive losses. Is my thinking correct?Comment
-
Once she disposes all interest in the partnership and its assets, I don't see a reason she coudn't take the losses.MichaelComment
Comment