Loss Limitation Provisions Impacting Partnerships and S Corporations (LPPS)

The Tax Cuts and Jobs Act added Section 461(l) to the Internal Revenue Code, limiting losses that would have been available previously. This complex provision has received little attention from most general tax practitioners. Because many owners of S corporations, partnerships and limited liability companies are now subject to five loss limitation provisions, practitioners must understand and apply all five. This program covers each loss limitation provision separately and discusses how each relates to the others.

• Determination of a taxpayer’s basis in a pass-through entity
• Suspended losses and deductions due to basis limitations
• How at-risk rules limit loss deductions
• Passive activity loss rules that suspend losses
• How Section 461(l) loss limitation provisions work
• The net operating loss limitation rules and how they relate to Section 461(l)

• Describe the five loss limitation rules applicable to losses allocable to partnerships and S corporations
• Understand how partner/S corporation shareholder’s basis impacts the ability to take losses