Can K1 income be offset by capital loss?

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kxl19
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Joined: Wed Mar 13, 2013 12:41 am

Can K1 income be offset by capital loss?

Post by kxl19 »

We have a physician family considering a partnership in an ASC (ambulatory surgical center) .

Seems that the income is reported on a K1, which we’re not familiar with.

We’ve been doing tax loss harvesting and have a carry forward loss.

Does anyone know whether capital losses can be used to offset K1 income?
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Lee_WSP
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Location: Arizona

Re: Can K1 income be offset by capital loss?

Post by Lee_WSP »

Only 3,000 per year. But it takes it off the top of all income, so the answer to your question is no.
livesoft
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Re: Can K1 income be offset by capital loss?

Post by livesoft »

Schedule K-1 capital gains income goes on Schedule D Line 5 and/or 12, doesn't it? That means it can be offset by capital loss.

So what do you mean by "K1 income"? :)

All kinds of income are reported on Schedule K-1.
Last edited by livesoft on Sun Jan 29, 2023 11:21 am, edited 1 time in total.
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martincmartin
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Re: Can K1 income be offset by capital loss?

Post by martincmartin »

It might depend on whether the losses are considered passive or active. Look up "passive activity losses." But maybe that's only for real estate?

You probably want to consult an actual tax accountant, rather than an internet forum.
JackoC
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Re: Can K1 income be offset by capital loss?

Post by JackoC »

kxl19 wrote: Sun Jan 29, 2023 10:25 am We have a physician family considering a partnership in an ASC (ambulatory surgical center) .

Seems that the income is reported on a K1, which we’re not familiar with.

We’ve been doing tax loss harvesting and have a carry forward loss.

Does anyone know whether capital losses can be used to offset K1 income?
As others suggested, K-1 is not a type of income. Rather, all types income from a 'pass through entity' are reported on various lines of form K-1 on the entity owners' individual tax returns. So if I might guess the actual question is whether personal capital loss carry forwards can be subtracted from business income of the ASC reported on form K-1, 'no', except for the $3k/yr allowance for subtracting capital losses/carry forwards from any other kind of income. If that's the question, the answer is clear and doesn't require spending money on a professional. The only type of income on the K-1 from which personal capital loss carryforwards could be subtracted, beyond the $3k limit, would be capital gains recognized by the ASC (eg. if it owns its office property then sells it for a gain). Only capital gain can be netted against capital loss beyond that $3k limit, it doesn't matter whether the income flows onto the personal return via a K-1 or otherwise. Other responses got into 'passive activity' rules but that would only be relevant if you were asking how *losses* on the ASC business related to person income /gains, opposite way around from what you seem to be asking.
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