In 2011,Judy invested $200,000 for a 25% interest in a limited liability company (LLC)involved in an activity in which she is a material participant.The LLC reported losses of $680,000 in 2011 and $360,000 in 2012 with Judy's share being $170,000 in 2011 and $90,000 in 2012.How much of the losses can Judy deduct?

Question

Quizplus · Accepted Answer

Judy can deduct up to her basis in the LLC. In 2011, her basis is $200,000, so she can deduct the full $170,000 loss. In 2012, her remaining basis is $30,000 ($200,000 - $170,000), so she can only deduct $30,000 of the $90,000 loss.

In 2011,Judy Invested $200,000 for a 25% Interest in a Limited