Limited Liability Partnership with a loss - is the amount of loss that can carry through to personal income limited?

Question

My wife & I Jointly own a small LLC for a side business (50/50 partnership), we had revenue of about $4000 and expenses of about $8500 for a net loss of $4500 in 2016.

I just got our initial tax return back from our accountant and the K1 forms are only showing a loss of about $2000 total (split between my wife & I).

We have over $100k in other income on my personal tax return so obviously I want the full amount of my business loss to flow through to the personal return to offset other income.

Is there some sort of limitation that prevents us from using the full loss? We are fully liable for the business and personally run it, we're not passive partners or anything.

I've emailed my accountant asking for an explanation but wondering if there's some rule that I'm missing?

tro · Answer

the losses will be limited to your capital contributions
it would appear that your losses exceeded your capital account and losses cannot make that account negative, they simply are no longer recognized as losses

Judy · Answer

Are some of the items that you're calling a loss things that must be depreciated rather than expensed?

Wayne Z · Answer

Were a lot of your expenses "Business Meals"?

If so, that may explain the difference.  Meals are only 50% deductible.

? · Answer

U asking here ?
2500$ loss doesn't mean that much difference on Tax returns.
Accountants will explain it better.

Eva · Answer

You need to look at the partnership return, not just the K-1s.  There may be things you are calling expenses that are actually capital purchases and have to be depreciated instead of being written off.  Your loss deduction is limited to your actual investment in the business.

Limited Liability Partnership with a loss - is the amount of loss that can carry through to personal income limited?

5 Answers