topic With LLC, do Capital Gains offset Operating Losses? in Business & farm

With LLC, do Capital Gains offset Operating Losses?

PFloyd — Thu, 01 Oct 2020 15:59:50 GMT

Greetings,
I'm trying to make decisions about running an LLC small business (small farm). It's tough to get going and may have losses for years due to equipment expenditures and investment in the land. I wouldn't want to get a Hobby Loss determination. If I had the ability to invest in futures/stock market profitably under the name of the LLC, would the Capital Gains and Operating Losses offset each other at all? If a business lost 50,000 in the operation side of the business but made 100,000 investing, would it be considered to be a profitable year for the business from the perspective of Hobby Loss regulations?
Thank you

Re: With LLC, do Capital Gains offset Operating Losses?

Critter-3 — Thu, 01 Oct 2020 16:13:53 GMT

I HIGHLY recommend you sit down with a local tax pro/financial advisor to define what this "LLC" business really is and how it will be taxed. If this is simply a single member LLC reported on the Sch F then YOU not the LLC would be investing in the market and those cap gain sales would be reported on the Sch D. There are so many options to discuss and this public forum is not the correct place to do so as you will not know if you are getting good or accurate advice. Your total income situation needs to be discussed along with your goals and plans ... please seek local financial/tax planning before you make costly mistakes.

Re: With LLC, do Capital Gains offset Operating Losses?

Carl — Sat, 03 Oct 2020 13:44:13 GMT

@PFloyd you are seeking tax and business advice - not seeking help on completing or filing a tax return. We don't give advice in this public user-to-user forum. The closest you'll see to that is where maybe someone will outline all of the options available to you, based solely on the information you've provided. But the bottom line decision is yours and you alone carry the responsibility for that decision.

You really need to seek the services of a professional - and not just a tax professional either. I would suggest you seek out a professional versed in the business disciplines you're involved in and are looking at becoming involved in. Such professionals need to educate you, more so than just advise you. This will enable you to make a more informed and educated decision on what is the best course of action for "you". It's generally not a good idea to allow others to make that decision for you, or to allow others to influence your decision. You need to get educated on these matters.

Re: With LLC, do Capital Gains offset Operating Losses?

AmeliesUncle — Mon, 05 Oct 2020 14:40:12 GMT

The losses don't make it hobby. How you are running the activity determines if it is a business or a hobby. Make sure you are treating it as a business:

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

Re: With LLC, do Capital Gains offset Operating Losses?

Anonymous_ — Sat, 03 Oct 2020 19:45:10 GMT

@AmeliesUncle:

Your link is not functional because an extraneous string was added. However, I believe you intended to post the link below.

https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

Re: With LLC, do Capital Gains offset Operating Losses?

AmeliesUncle — Sat, 03 Oct 2020 19:47:26 GMT

Thanks. This forum's spam filter or private-information filter does that to links from non-"Champs".