In 2014, Joanne invested $90,000 for a 20% interest in a limited liability company (LLC) in which she is a material participant. The LLC reported losses of $340,000 in 2014 and $180,000 in 2015. Joanne's share of the LLC's losses was $68,000 in 2014 and $36,000 in 2015. How much of these losses can Joanne deduct?

Question

Quizplus · Accepted Answer

Joanne can deduct up to her basis in the LLC. In 2014, her basis was $90,000, and she deducted $68,000, leaving a basis of $22,000. In 2015, she can only deduct $22,000 of the $36,000 loss, as that is her remaining basis.

In 2014, Joanne Invested $90,000 for a 20% Interest in a Limited