Let's say an LLC owns some shares in company XYZ, and it also owns a small retailing business. The shares are sold and they make a capital gain of $1,000 this year. And the retailing business loses $500 this year. In what ways can the loss reduce the tax burden of the profit?
asked Aug 6, 2015 at 20:26
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Do you currently own this LLC or is the whole set up theoretical?– JTP - Apologise to Monica ♦Aug 6, 2015 at 20:33
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@JoeTaxpayer It's theoretical. I'm looking at my options. I do own an LLC retailing business.– thanks_in_advanceAug 6, 2015 at 21:29
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1 Answer
In no ways.
Both will be reported to the members on their K1 in the respective categories (or if it is a single member LLC - directly to the individual tax return). The capital gains will flow to your personal Schedule D, and the business loss to your personal Schedule C.
On your individual tax return you can deduct up to 3K of capital losses from any other income. Business loss is included in the income if it is active business, for passive businesses (like rental) there are limitations.
answered Aug 7, 2015 at 2:05
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By your first line, you mean they are unrelated. Right? Aug 7, 2015 at 3:06
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1Yes, and the fact that both are under LLC is meaningless. In fact, its better not to put personal investments under the same LLC as the retail business, because the whole point of LLC is separation of assets. Aug 7, 2015 at 4:13
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Regarding the 3k of capital losses... for how many years later can one use the capital losses to cancel future capital gains? Aug 11, 2015 at 7:30
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Until you run out of it. Which may be never (ask those that got burnt on the dot com crash and will be writing off losses until they die) Aug 11, 2015 at 8:10
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@user1883050 you do understand that the 3K write-off rule has nothing to do with the LLC, right? Anyone can write off up to 3k capital losses/year from their ordinary income. Aug 11, 2015 at 8:11