ETax847 Posted June 9, 2020 Report Share Posted June 9, 2020 Client has a loss of $89k in box 1 for Ordinary Business Loss and Guaranteed Payments of $125k in Box 4 of his 1065 K-1. His ending capital account on Line L shows a negative amount. Is the tax payer able to take the loss having a negative capital account or does that change things? Quote Link to comment Share on other sites More sharing options...
ETax847 Posted June 9, 2020 Author Report Share Posted June 9, 2020 Client's CEO emailed client saying "With regards to effects on your personal return, profits interests won’t have a tax basis or at-risk basis to take any losses.Tax advisers should know that any disallowed losses are carried forward and will be allowed at any time you dispose of your interest" My question is why is the Ordinary Business Loss carried forward? Quote Link to comment Share on other sites More sharing options...
Abby Normal Posted June 9, 2020 Report Share Posted June 9, 2020 30 minutes ago, ETax847 said: Client has a loss of $89k in box 1 for Ordinary Business Loss and Guaranteed Payments of $125k in Box 4 of his 1065 K-1. His ending capital account on Line L shows a negative amount. Is the tax payer able to take the loss having a negative capital account or does that change things? You need to know the partner's capital BASIS and debt basis. The capital may not equal the partner's outside basis. Did the K1 come with basis worksheets? If not, then ask for them, or reconstruct basis with your client. 1 Quote Link to comment Share on other sites More sharing options...
ETax847 Posted June 10, 2020 Author Report Share Posted June 10, 2020 Thanks Abby! Much appreciated. Quote Link to comment Share on other sites More sharing options...
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