In today’s Wall Street Journal there is an article, “Entrepreneurs Win Tax Case Versus IRS“, that says that a Tax Court decision has been reached which will allow investors in certain kinds of businesses to deduct losses against salary and investment income. The article goes on to say that this is a change from the current situation where “investors often can only deduct losses in a business against future profits from the business, which in some cases prevents taxpayers from getting to use the deductions at all.”
The article includes an example of how this may benefit entrepreneurs: ”Suppose you have interests in two businesses, each organized as a limited-liability company. You work six hours a week in each of these businesses. Together they post losses of $175,000. You also have $200,000 of salary and investment income. According to the IRS, you have $200,000 of taxable income. But under the Tax Court decision you would have only $25,000 in taxable income, because the $175,000 loss can offset your other income.”
If you think this may help you, you may want to contact your CPA for more info.
