Today TaxMama hears from Barb in San Diego, who needs advice. “I have Passive Activity Loss carryforwards. Are there any types (REITs, MLPs, etc) of publicly traded companies that have Passive Activity Income to offset those carryforwards? I don’t want to personally own income generating real estate and have to do all that work.”
Hi Barb,
Yup, I can understand all that.
Look for investments that are structured as partnerships – and that produce a profit. Obviously, it’s not losses you’re looking to generate. Though, generally, those passive investments are designed to generate paper losses (through depreciation, etc.).I don’t know why. After all, most of the people investing in them have incomes too high to permit deductions of passive losses. These days, the promoters should be looking for investments that generate passive income – or credits.
Investments structured as S Corporations would also work. However, due to the limitation of 100 shareholders, you can generally only find those investments through personal contacts.
As to your passive loss carryforwards, you can use them if you sell the investments with which they are associated. How did you generate the passive losses? From real estate you owned? If you no longer own the properties, you should have been able to use the losses when you sold them.
And remember, you can find answers to all kinds of questions about using passive losses and other tax issues, free. Where? Where else? At TaxMama.com.
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