Do You Have Passive Activity Losses?

August 25, 2013  |   Posted by :   |   Personal Tax Advice,Tax Tips   |   Comments Off»

Are you aware that there are certain types of investments that create passive income which can offset suspended passive losses, when applicable, resulting in a tax-free income stream until those losses are exhausted.

Common passive activity losses (which are shown on IRS form 8582) include equipment leasing, rental real estate and some passive losses from certain pass through corporations and partnerships in which the taxpayer does not materially participate.

In most cases high-income individuals with adjusted gross income over $150,000 cannot deduct losses in rental real estate until such time that they generate passive income and/or dispose of the property.

Interest and dividend income and capital gains income from sale of stocks cannot be used to offset passive activity losses.

We can help you understand this complex issue related to passive activity losses and discuss in general, possible alternatives to possibly utilize those losses.

We would be glad to schedule an appointment to further discuss your tax situation and planning.

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