In 2016,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 2016 and $180,000 in 2017.Joanne's share of the LLC's losses was $68,000 in 2016 and $36,000 in 2017.How much of these losses can Joanne deduct?

Question

Quizplus · Accepted Answer

Joanne can deduct up to her basis in the LLC. In 2016, her basis was $90,000, so she can deduct the full $68,000 loss. In 2017, her remaining basis is $22,000 ($90,000 - $68,000), so she can only deduct $22,000 of the $36,000 loss.

In 2016,Joanne Invested $90,000 for a 20% Interest in a Limited