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Clear 3 hurdles to deduct losses passed through your LLC

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in Small Business Tax,Small Business Tax Deduction Strategies

If your company creates a side business, you'll definitely want to consider structuring it as a limited liability company (LLC) owned by you. You'd enjoy multiple tax benefits, such as:

• You can deduct your share of losses on your personal tax return. If you hold a 25 percent interest in an LLC, for example, and the LLC incurs a $400,000 loss, you can qualify for a $100,000 deduction.

• You won't pay corporate income tax when the business turns a profit. An LLC, like an S corp or a partnership, isn't subject to the corporate income tax.

• Your personal assets will enjoy the same liability protection as they would if you incorporate your company.

• You don't need to meet all the criteria required of S corps. For example, you can select a foreign co-owner.

Shelter your SE taxes

Finally, an LLC can provide shelter from self-employment taxes. For example, say your self-employment income is subject to s...(register to read more)

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{ 2 comments… read them below or add one }

tony February 16, 2015 at 9:19 pm

what if the llc partners’ K-1 equity balance shows a loss? Can they still deduct their share for the current year’s loss?


Suraj Prskash February 17, 2013 at 6:49 am

Very useful discussion. Saves us a lot of Research that was due.

My CPA was supposed to check the rules on basis computation in case the loan is guaranteed by the partners of the LLC. This discussion saves us this bother.


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