Hello! In 2016 I closed my LLC partnership that was owned and operated by my husband and myself. We originally purchased the LLC for $34,000 5 years ago. Every year we operated it we had a positive income. The business was a service business that did not have any property, inventory, or investments. We decided to move in 2016 and could not take the business with us. We tried to sell it for 9 months but could not find any buyers and could not operate it once we moved. Unfortunately, we just had to stop operating. I am trying to figure out what to do with our original investment. Our tax basis in the company is the original investment as we took all the income for the distributions each year. Is this a capital loss or and ordinary loss? It seems I could claim that we abandoned our interests in the LLC and it is now worthless. Thank you for your help!
Sir the capital investment is in Bank or it is exhausted due to loss. This question i am asking since when there is capital on the liability side then the corresponding debit should also be there in the form of Bank balance or cash Balance or in any other form.
Please give more details for suggest you better
Dear Madam,
The loss you are referring is arising out of the cost incurred for acqusition of business and it will amount to capital gain loss.
Your investment value in the LLC shall have nill value as on date and same should be treated as loss under Capital gain only.
Hello Sir,
My apologies for not being able to solve your query as I am not an expert in US state taxation.
Trust this clarifies your query.
Feel free to call / get back in case of further clarifications.
Thanking You.
Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
It appears that you are referring to US taxation and not Indian taxation.
The loss on closure of your LLC partnership business is a capital loss. However, you will not be able to set off this capital loss against your regular income, except to the extent of US$3,000/-. The balance will be carried forward to next year.
The set off of loss also depends upon the nature of your business- S corporation or C Corporation. As S Corporation is a pass through entity, the loss will be considered as your personal loss. It appears that your LLC is a partnership. You can then opt to be taxed as part of your personal return or as a separate entity.
I suggest that you should take professional help while filing your tax return for 2016.
Dear Taxpayer,
It appears that you are referring to US taxation and not Indian taxation. I am sorry, I am not US tax expert.
However, as per generally accepted accounting policies, losses on closure of your LLC partnership business is a capital loss.
Thanks and Regards
Abhishek Dugar
CA CS B.Com
Hi
Since you were operating in USA, you'll have to check the corresponding laws. Indian income tax law is not relevant.
