SunTaxMan Posted February 20, 2011 Report Share Posted February 20, 2011 S-Corp shareholder, passive, with several years of losses, suspended. Now business is becoming profitable and shareholder is becoming employee and working in the business. Payroll being paid. Can I use passive losses against now active gain from K-1, or are passive losses restricted for use ONLY against passive gains? Same shareholder, same business. Quote Link to comment Share on other sites More sharing options...
imjulier Posted February 20, 2011 Report Share Posted February 20, 2011 Passive losses can only offset passive gains. How many shareholders? If he is the only SH, maybe passive losses before weren't really passive....maybe he was just not working the business? If definitely passive, any way to bring someone else in to the business now who can be active, like a wife and the husband can be passive? Just thinking of ways to get around it. Julie Quote Link to comment Share on other sites More sharing options...
SunTaxMan Posted February 20, 2011 Author Report Share Posted February 20, 2011 2 shareholders 50/50, unmarried. Other shareholder is and remains active and on payroll. Quote Link to comment Share on other sites More sharing options...
Bart Posted February 20, 2011 Report Share Posted February 20, 2011 If definitely passive, any way to bring someone else in to the business now who can be active, like a wife and the husband can be passive? Julie If the wife has active participation, the husband is considered to have active participation and it will still not be a passive activity to him. IRC § 469(h)(5) and Reg. § 1.469-5T(f)(3) Quote Link to comment Share on other sites More sharing options...
Gail in Virginia Posted February 21, 2011 Report Share Posted February 21, 2011 Were the losses from the S-Corp suspended because they were passive or because he had used up his basis? Quote Link to comment Share on other sites More sharing options...
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