Can I enter a net investment loss for a Series LLC?

[chizzlewhit]

Inhave an investment with a partial return of capital and a net loss. How do I enter this?

[AliciaP1]

It depends on the form the return of capital and net loss is reported to you.  I'm assuming you got a Form 1065 (Schedule K-1), Partner's Share of Income, Deductions, Credits, etc., from a partnership you invested in.

To enter this form in TurboTax CD/Download you can follow these steps:

1. Sign in to your TurboTax
2. Open or continue  your return
3. Using the search bar, type K-1 and select the Jump to link in the search results
4. This will take you to the Schedule K-1 and Schedule Q screen
   • Note: If the Jump to link doesn’t work, select Personal, then Personal Income
5. Select I’ll choose what I work on and continue until you reach the screen, Your 2022 Income Summary
6. Select Start next to Schedule K-1 under Business Investment and Estate/Trust Income
7. Answer Yes and follow the prompts
8. We’ll ask some questions about your K-1, and then you’ll enter the data from the form

[chizzlewhit]

Hi Alicia, that was a fast reply!

That's not my situation, though. For background, I'm an EA, a currently employed preparer, and a partner in a partnership too.

This isn't a 1065 distribution, though. I'm a member of a Series LLC which has made several distributions from various of the series. For those, they issue a 1099-Div. One of the series has closed out, though, and I got a non-taxable dividend (return of capital), and a LT capital loss -- just described that way, in text. I couldn't see how to enter it, so I pretended I got a 1099-B, ignored all the fields that didn't apply, and entered the return of capital and a long-term cap loss only. It worked, at least in that the software didn't object. We'll see if the IRS buys it!

All that said, is there a better way to do this? It doesn't make sense to pretend I'm a sole prop. What other approaches could work? I have reason to believe this will happen again, next year.

Thanks!

[AbrahamT]

That's most likely the best place to put it because long term capital losses are used to offset long term capital gain. See HERE

If you have a net capital loss for the year, then that could only be used against ordinary income up to the amount of 3,000. Since there are limitations when dealing with a long term capital loss, then this is where to enter it. Just to clarify, on what form did you get this information on? And where did you enter the return of capital being that it was not a taxable event. I would keep a copy of the source document for my records incase it becomes an issue down the road so it could be explained.

[chizzlewhit]

Thanks, Abraham. To clarify, I didn't get any form. We're talking small beer here, under four figs. The amounts were just mentioned as a sidebar in the text of a explanation of dividends from currently-owned assets. I have saved everything on the off chance there's a question, that's always sound practice.

[AbrahamT]

Great.  Best of luck to you.