Discussion:Limited partner loss deduction

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Discussion Forum Index --> Tax Questions --> Limited partner loss deduction

Rwalker (talk|edits) said:

8 November 2005
Can a limited partner treat his share of partnership losses as active if he actively participates as President and sole owner of an LLC that is the General Partner? Please see below:

Facts: Limited partnership about to be formed. The LP has one general partner (an LLC and active participant) with a 1% share in profits, losses and capital. There are 4 limited partners with equal 24.75% shares in profits, losses and capital. All partners invest cash. Limited partner #1 is an individual and also is the President and sole owner of the LLC. The partnership will have losses.

Conclusion and questions: The LLC’s share of the loss will be an active loss. Can LP partner #1’s loss be treated as active since he actively manages the LP thru the LLC? If so, would that jeopardize his limited-liability status?

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