K1 - Passive or Non-Passive

Forum|Forum|1 year ago
September 25, 2024
4 replies
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I have a K-1 from the following, but I'm not sure if these are passive or non-passive losses.

- K-1 for the investment fund that I work for and for which I invested capital to the fund

- K-1 for my carried interest in the fund I work for

- K-1 in an employee fund that invests in companies. I invested capital to the employee fund.

Since i provide services to the fund, is this non-passive activity?

Anonymous_

Level 15

No text available

Mike9241

Level 15

passive activity is defined in IRC 469

(c)Passive activity defined
For purposes of this section—
(1)In general
The term “passive activity” means any activity—
(A)which involves the conduct of any trade or business, and
(B)in which the taxpayer does not materially participate.
(2)Passive activity includes any rental activity
Except as provided in paragraph (7), the term “passive activity” includes any rental activity.

(h)Material participation defined
For purposes of this section—
(1)In general
A taxpayer shall be treated as materially participating in an activity only if the taxpayer is involved in the operations of the activity on a basis which is—
(A)regular,
(B)continuous, and
(C)substantial.
(2)Interests in limited partnerships
Except as provided in regulations, no interest in a limited partnership as a limited partner shall be treated as an interest with respect to which a taxpayer

Mike9241