Passive Loss Carryforwards

[Cheryl Rein]

I have an elderly client (quite wealthy) who years ago invested in all these limited partnerships that lost money. Needless to say, she has accumulated lots of passive losses over the years with no passive income to offset them.

These partnerships are now going out of business and issuing final K-1's to her.

Any creative ideas on what she can do with these passive losses?

Cheryl Meyer Rein
Meyer & Johnson
Orlando, FL

[Unregistered]

final K-1

Any creative ideas on what she can do with these passive losses?

The passive loss can be taken when the final K-1 is issue, even if you don't have any passive income.

[Cheryl Rein]

Passive Losses

The passive loss can be taken when the final K-1 is issue, even if you don't have any passive income.

Are you SURE she can take these passive losses? Do you have a source I can use?
Country Boy says they are permanently lost, so I have two different opinions here.

Cheryl Rein
cherylrein@aol.com
407-854-7743

[Unregistered]

Passive loss

From TTB 7-8

Passive Activity Loss Limits
Suspended losses are allowed as a deduction in the year the activity is fully disposed of in a taxable transaction.

See Example under Partnerships and S corporations.
Assume that Tina sells her interest in Limited Partnership A in January of 2006 and reports a capital gain of $1,500. Since the activity as completely disposed of in a taxable transaction, Tina reports a $1,500 capital gain on Schedule D, and also deducts the carryover loss of $3,500 on Part II, Schedule E.