Material participation key to deducting LLC and LLP losses

If your business is a limited liability company (LLC) or limited liability partnership (LLP) and you can be considered a general partner, you can meet any one of 7 “material participation” tests to avoid passive treatment under the passive activity loss rules. The rules prohibit taxpayers from offsetting losses from passive business activities (such as limited partnerships or rental properties) against nonpassive income (such as wages, interest, dividends and capital gains). Contact us to learn about the 7 tests and how to ensure you can meet at least one of them.