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dn3187
New Member

I have a personal loss carry forward from stock sales. This year I have created an LLC which has generated profits. Can my loss carry forward offset my LLC gains?

Help please

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3 Replies

I have a personal loss carry forward from stock sales. This year I have created an LLC which has generated profits. Can my loss carry forward offset my LLC gains?

If you fill out schedule C for the LLC then No.  only against investment gains.  You get to first offset the loss against any gains you have each year so that can use more of it up.  Then after applying the loss to the current gains you can take a max loss of 3,000 per year.
Carl
Level 15

I have a personal loss carry forward from stock sales. This year I have created an LLC which has generated profits. Can my loss carry forward offset my LLC gains?

Investment income and investment losses are passive. Passive losses can only be taken against passive income. Your SCH C business is not passive. So the passive losses from the stock sales can not be used to offset the taxable income on the SCH C.

I have a personal loss carry forward from stock sales. This year I have created an LLC which has generated profits. Can my loss carry forward offset my LLC gains?

Just to make certain that what you say is what it appears:

  1. In one or prior years, you personnally, and reported on your Schedule D to Form 1040, reported a net capital loss, either short-term or long-term with a net loss carried forward t0 2018.
  2. The capital loss was recognized in the sale of investments that you held personally and not as business investments.
  3. Now, separate from this discussion, you created an LLC for Business Income.

Question:  Is the purpose of the LLC to hold investments and to trade for gain or loss?

IF NOT (!), and if the LLC is for some operating business not connected to your previous investment activity, then do consult the IRS explanation at the link which follows, which does explain that separate from offsetting losses (S/T or L/T) against capital gains, you can in terms of your personal non-business income offset up to $3,000 of loss against ordinary income.  This offset in the new for 2018 IRS forms will appear on the "Schedule 1" line 13 (see image below).

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https://www.irs.gov/newsroom/helpful-facts-to-know-about-capital-gains-and-losses

Capital Losses

Taxpayers whose capital losses are more than their capital gains can deduct the difference as losses on their tax returns, up to $3,000 per year, or $1,500 if married and filing a separate return. When their total net capital loss is more than the limit they can deduct, taxpayers can carry it over to next year’s tax return.

Capital loss deductions are applicable to the sale of investment property, but not on the sale of property held for personal use.

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