Can I net losses from a LLC,where I am a partner, with my Income from my "single member" LLC?

Question

I have 3000 Income as a laywer and 2000 loss from a trade business. Does this 2000 $ loss decrease my Income tax and my self-employment tax

Answer 1

If, by "trade business", you mean a investment business: The answer is no and yes. No, the loss will not decrease the self employment portion of the tax that you owe from income as a lawyer, yes, it will decrease the income tax portion of your liability. The reason is because one LLC is self employment income and the other is passive income.

Answer 2

All LLCs are "pass-through" entities. Your income flows to you on a K-1 depending on it's category (ordinary, capital, passive, self-employment, etc.) These add to your other income from outside the K-1 and act just like they came from outside the K-1. In other words, all passive income adds together, all dividends add together, all capital gains/losses add together. You get the idea.

So, all self-employment income is added together regardless where it originates before figuring out SE tax. SE income from one K-1 (line 14; line 9 on a 1065-B K1) minus SE losses from another K-1 (up to your "at-risk" amount) gets added to any SE income from a Schedule C or Schedule F prior to figuring out SE tax. Other losses from other income categories on K-1s will NOT affect your SE tax.

Answer 3

If your K-1 from the partnership shows a $2000.00 loss, then yes it should decrease your taxes.