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Llc Basis????

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    #1

    Llc Basis????

    We argued over this before. Let us start it again. LLC members taking loses on an active trade or business, do they have to (will be filing as a 1065):

    1. material participate in the business?
    2. is it limited to "their" basis as to amount that can be taken

    Originally I remember single member LLC's filing as Sch C did not have to worry about basis limitations. Why should multi-members on 1065 be limited????

    Can I be considered the seniorest member if I played a softball game for "Taxmen Inc", I think a predecessor to QF and TaxBook. I should let you know they never asked me back...
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    #2
    Originally posted by JON
    Can I be considered the seniorest member if I played a softball game for "Taxmen Inc", I think a predecessor to QF and TaxBook. I should let you know they never asked me back...
    Depends…what year did you play? Who invited you to play? What was the name of the owner's brother?

    Originally posted by JON
    Originally I remember single member LLC's filing as Sch C did not have to worry about basis limitations. Why should multi-members on 1065 be limited????
    Actually, yes, a Schedule C LLC would also be subject to basis limitations under the at-risk rules. That is what the question on line 32 of Schedule C is all about.

    Comment

      #3
      An example of a single member LLC filing Schedule C and not being able to deduct losses would be if the owner took out a business loan to finance the business and under state LLC laws, the sole proprietor is not personally liable to re-pay the debt. If the Schedule C loss is generated from borrowed funds the taxpayer is not personally liable for, the at-risk rules say the loss must be suspended until the taxpayer is personally at-risk for the loss.

      Comment

        #4
        Jim B

        Jim B and I worked at IDQ summer of 1972. Met both Uncles "Taxman" and the one running the NCO club at Snelling. If Jim is on here did Kjelden get a hold of you? He has a company in a northern suburb. I told him of your early retirement. We are jealous.

        Agree on the C you pointed out. If members(partners) are liable for loans are they at risk???

        Comment

          #5
          Originally posted by JON
          Jim B and I worked at IDQ summer of 1972. Met both Uncles "Taxman" and the one running the NCO club at Snelling. If Jim is on here did Kjelden get a hold of you? He has a company in a northern suburb. I told him of your early retirement. We are jealous.
          If you met Jim in ’72 and both uncles, then you are the seniorest member here. Jim retired in 2001.

          Originally posted by JON
          Agree on the C you pointed out. If members(partners) are liable for loans are they at risk???

          Yes. If they are liable to repay the loan, then they are at-risk and receive basis.

          Comment

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