Entrepreneurs Win Tax Case Versus IRS
With the U.S. Tax Court's recent ruling allowing Nebraska farmers and active investors Paul and Alicia Garnett to deduct losses against salary and investment income, tax advisers will probably start telling their clients to do the same. Applying only to LLC and LLP investors, the decision marks the first time the IRS has lost its ongoing efforts to limit the tax deductions that small-business investors can take, based on the belief that losses from these businesses should be considered passive. And it will particularly benefit entrepreneurs with interests in multiple businesses. Prior to the case, investors could only deduct losses against future profits, which left many taxpayers unable to use the deductions.
Source: WSJ.com | July 8, 2009