In 2010,Cindy invested $100,000 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 $340,000 in 2010 and $180,000 in 2011 with Cindy's share being $85,000 in 2010 and $45,000 in 2011.How much of the losses can Cindy deduct?

Question

Quizplus · Accepted Answer

Cindy can deduct up to her basis in the LLC. In 2010, her basis was $100,000, so she can deduct the full $85,000 loss. In 2011, her remaining basis is $15,000 ($100,000 - $85,000), so she can only deduct $15,000 of the $45,000 loss.

In 2010,Cindy Invested $100,000 for a 25% Interest in a Limited