A loss carry forward question for any of you accountant types....

[Boomyal]

....if any of you are still alive at this point.

Here is the deal, regarding the use of a closed business (actually a closed General Partnership) loss carry forward. I know that loss carry forward is good for 15 years and can be used to reduce taxable earned income on an unlimited basis. Can that loss carry forward be used to offset any capitol gains, short or long term?

I do know that Capitol losses do not have an expiration date and can be used to offset any capitol gains on an unlimited basis but can only be used to offset earned income at the rate of $3000.00 per year

 

[Boomyal]

Re: A loss carry forward question for any of you accountant types....

<Bump> Maybe the pressure is off some of you who do accounting. I'd still like an answer to this question even though I do not need the info for this tax cycle.

 

[Outsider]

Re: A loss carry forward question for any of you accountant types....

Did the general partnership file a tax return that reported the loss? If so, not sure they're transferable, and may have died with the partnership ... :cold:

 

[Boomyal]

Re: A loss carry forward question for any of you accountant types....

Did the general partnership file a tax return that reported the loss? If so, not sure they're transferable, and may have died with the partnership ... :cold:

Yes, the General Partnership filed both a tax return and the K-1's to all the Partners. Our personal taxes have already been filed and they show a sizable negative income due to the passed on Partnership loss.

 

[bruceb58]

Re: A loss carry forward question for any of you accountant types....

Yes, the General Partnership filed both a tax return and the K-1's to all the Partners. Our personal taxes have already been filed and they show a sizable negative income due to the passed on Partnership loss.

Do you really mean "passive" when you say passed?

Unallowed passive losses because you hit an income limit are carried forward and can offset future gains in a business. For example, if you have depreciating assets that you depreciated to zero and then sold them later, the passive disallowed losses can be applied to that realized gain.

If this is the subject you are talking about, here is an example:
http://www.bankrate.com/finance/taxes/cashing-in-deferred-passive-losses.aspx

As far as it reducing your earned income(non investment), I am almost positive it can't but you really need to talk to a CPA to be sure.

 

[Boomyal]

Re: A loss carry forward question for any of you accountant types....

Do you really mean "passive" when you say passed?

Unallowed passive losses because you hit an income limit are carried forward and can offset future gains in a business. For example, if you have depreciating assets that you depreciated to zero and then sold them later, the passive disallowed losses can be applied to that realized gain.

If this is the subject you are talking about, here is an example:
Cashing In On Deferred Passive Losses | Bankrate.com

As far as it reducing your earned income(non investment), I am almost positive it can't but you really need to talk to a CPA to be sure.

Well bruce I did mean 'passed' thru losses (from the partnership to the partners) but you raise a good point, ie, passive income/loss vs capitol income/loss. If passive income is a category I guess my question whether previously accumulated capitol losses could be used to offset Passive income gains.

I did just email my accountant and have not heard back yet. I thought I would pose the question here while my accountant was busy with the April 15 deadline. Seems that all here who might of answered were similarly tied up.

 

[bruceb58]

Re: A loss carry forward question for any of you accountant types....

Its not passive vs capitol...its passive vs non-passive. Unless you actually spend 400 hours a year contributing to the workings of the partnership, you are passive. Depending on how much AGI you have, you are only allowed so much passive loss.

You file a Schedule E with all your K-1 partnerships on it? You also file a form 8582?