Discussion:A Partnership interest that is not a passive activity

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Discussion Forum Index --> Tax Tips --> A Partnership interest that is not a passive activity

HPTAX (talk|edits) said:

16 March 2006
I invested in a limited partnership through my broker. The partnership trades in personal property (Stock, futures, etc.). I do not materially participate in the partnership. Under the regs Sec 1.469-1T(e)(6), " Activity of trading personal property--(i) In general. An activity of trading personal property for the account of owners of interests in the activity is not a passive activity " As a result, gains & losses are not from a passive activity. I do not have to materially participate in order to take any losses against regular income.

Wisard (talk|edits) said:

2 May 2006
In Tax Management Portfolio, Passive Loss Rules, No. 549-2nd, Passive Loss Rules, author, Daniel N. Shaviro offers the explanation that this rule "clearly prevents taxpayers from generating passive income (or losses) by investing in passthrough entities that trade personal property." Without the rule it was arguable that taxpayers could make a Passive Income Generator (PIG) to use passive activity losses by actively trading in securities.

Eriktax (talk|edits) said:

January 20, 2007
As usual, I agree with Mr. Shaviro.

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