In 2017, 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 2017 and $180,000 in 2018. Joanne's share of the LLC's losses was $68,000 in 2017 and $36,000 in 2018. How much of these losses can Joanne deduct?

Question

Quizplus · Accepted Answer

Joanne can deduct up to her basis in the LLC. Her initial basis was $90,000. After deducting $68,000 in 2017, her basis is reduced to $22,000, which is the maximum she can deduct in 2018.

In 2017, Joanne Invested $90,000 for a 20% Interest in a Limited