Section 469(h)(2) treats a limited partnership interest as presumptively passive for purposes of the passive loss rules, with the result that partnership losses cannot offset the limited partner's salary or investment income. The Court of Federal Claims yesterday, in Thompson v. United States, No. 06-211 T (Fed Cl. July 20, 2009), followed the Tax Court's decision last month in Garnett v. Commissioner, 132 T.C. No. 19 (June 30, 2009) (blogged here), holding that LLC interests are not subject to § 469(h)(2). As a result, members of LLCs can deduct LLC losses if they can prove that they materially participated in the LLC under the general rule of § 469(h)(1),
4 responses to “Court: LLCs Not Subject to Limited Partnership Passive Loss Disallowance Rule”
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
Claims Court agrees with Tax Court: LLC losses not automatically passive
Last month the Tax Court shot down an IRS argument that limited liability company losses are automatically “passive” under rules…
How does this case fit in with to §469(c)(2), which defines rental activity as a passive activity? Does this mean if I materially participate in my LLC which, conducts rental activity, I can now deduct my losses against my primary income? This of course assumes that I am not a person a tax payer in who is deemed in the “real property business.” §469(c)(7)