How to write off LLC investment in startup

[Mike9241]

@strabun the risk of an audit, generally very low, exists regardless of what year you write it off.  some returns are chosen at random others are selected because something on the return gets it flagged but then a human reviews it to determine whether an actual audit should be done.   

[strabun]

Hi Mike,

You were very helpful back in August when I made my initial post.  I now have a final K-1 for the LLC that has been dissolved.  As I enter the information into TT, I'm seeing my passive loss hitting Schedule 1, but TT also asked me for my sales price and cost basis.  I entered "$0" for sales price, and "$5,000" for my cost basis (purchase price).  In addition to the -$5,000 showing up in Schedule 1, I'm also seeing a -$5,000 in schedule D.  

Is this correct?  I'm worried that TT is reporting the same loss in two places and I don't want to be "double dipping".  Please advise, and thank you in advance!

Steve

[DianeW777]

Do not enter the same passive loss -$5,000 in two places.  It is a duplication of the same dollars.

As indicated by Mike9241 'if the losses exceed your 'basis' you'll have to use the at-risk form 6198 to limit the deduction to your basis'.  The suspended passive losses do pass through. However, if the losses exceed your 'basis' you'll have to use the at-risk form 6198 to limit the deduction to your 'basis'.

• Deduction for worthless partnership interest
• What is Form 6198?

Only you will know what cost basis, if any, remains in your LLC at the time of dissolution/closing.  This requires a record from start to finish of income and/or loss for the LLC.

@strabun