ncCPAp on the GO!

Basis for Loss , At Risk , LLC

  • 1.  Basis for Loss , At Risk , LLC

    Platinum Most Valuable Member
    Posted 19 days ago
    if three equal partners for an LLC and purchase a  limousine and rent it out at a loss.
    it is entirely financed.   can they deduct the loss.
    if i read correctly,  the loan( non-recourse ) will give them basis,  but due to the nature of the LLC, they will not be at risk.
    therefore, no loss to their 1040/.

    do i have this correct. ?

    ------------------------------
    Abby Alhante
    KURCIAS & ALHANTE, CPAs LLC
    Melville NY
    ------------------------------


  • 2.  RE: Basis for Loss , At Risk , LLC

    Bronze Most Valuable Member
    Posted 18 days ago
    Assuming the LLC is being taxed as a partnership then is correct as a nonrecourse loan gives you basis but not at risk.

    However, if the partners guaranteed the loan payments then its a recourse loan and you have both basis and at risk and therefore can deduct the loss to the extent of this loan, pro rata for each partner.

    As the loan is repaid it is a deemed distribution and will create income unless the basis is restored

    Vincent J. Preto, CPA
    Senior Partner
    Wagner and Zwerman LLP
    201 Old Country Road, Suite 202
    Melville, NY 11747
    631-777-1000 ext. 340

    Sent from my iPhone




  • 3.  RE: Basis for Loss , At Risk , LLC

    Platinum Most Valuable Member
    Posted 17 days ago
    Then, just when you thought it was safe, the passive activity loss rules kick in!

    Oh the joy of taxation!

    ------------------------------
    Robert Brown
    ROBERT N. BROWN, CPA
    Jericho NY
    ------------------------------