Limited partner status in a business generally offers valuable benefits, including liability protection and self-employment tax advantages. But it may also limit your ability to deduct partnership losses under the passive activity loss rules. Passive losses are usually deductible only against passive income unless you materially participate in the business. Limited partners face a tougher standard than general partners. Certain work, such as investor activities or tasks not customarily performed by owners, may not count toward material participation. Other limitations may also apply. Before investing in a limited partnership or claiming losses, contact us to discuss the tax implications.
