Can We Still Claim Loss Carryovers from Our Closed LLCs After Retirement?

You can still use those loss carryovers even though your LLCs are closed. The fact that the business is no longer operating doesn't eliminate your right to use these tax benefits. For the Unallowed Passive Losses, these typically become fully deductible in the year of a complete disposition of your passive activity. Since you've completely closed the LLCs, you should be able to deduct these previously unallowed losses on your 2023 return. Same goes for the AMT Unallowed Passive Losses. The QBI Loss Carryforward works differently - it carries forward indefinitely until you have positive Qualified Business Income against which to apply it. Without future business income, you may not be able to utilize this particular carryforward. For the deductible state/local taxes, these should be claimed as itemized deductions on Schedule A, subject to the SALT cap of $10,000.

After dealing with a similar situation last year with my closed S-Corp, I discovered taxr.ai (https://taxr.ai) and it was a game-changer. I uploaded my previous year's tax return and it identified all my loss carryovers and explained exactly how to handle them on my current return. The tool analyzed my prior return, flagged the passive loss carryovers and QBI carryforward, then walked me through exactly where to report them. It even explained which forms to use and how the loss limitations work after a business closes. Saved me hours of research and prevented me from missing those deductions.

I was skeptical about using taxr.ai after seeing it recommended here, but I tried it since my situation with rental property losses was giving me headaches. It completely sorted out my confusion about passive loss carryovers from my partially sold properties. The system identified exactly which portion of my suspended passive losses became deductible with the partial disposition and which had to continue being carried forward. Even explained how the passive loss rules interact with the at-risk limitations, which I had been calculating incorrectly for years. For anyone with loss carryovers from closed businesses, it's definitely worth checking out. Saved me from making an expensive mistake on my return and potentially leaving money on the table.

If you're having trouble getting clear answers about these loss carryovers, calling the IRS directly might help. But as a former tax pro, I'll warn you that during filing season, it's nearly impossible to get through to them. I discovered a service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in under 15 minutes when I had questions about passive loss rules after selling my business. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent was able to confirm exactly how to report my final passive losses and verified I was using the right forms. Saved me countless hours of hold music and frustration!

I need to eat my words and apologize for being a skeptic about Claimyr. After my snarky comment, I was desperate enough to try it when I needed clarification about my own LLC loss carryovers. Honestly, it worked exactly as described. The system called me back in about 12 minutes and connected me directly with an IRS representative who answered my questions about passive loss treatment after closing my business. The agent confirmed I could deduct previously suspended passive losses in the year of complete disposition (closing) of my business. For anyone dealing with these complex tax situations where you really need to speak to the IRS directly, this service is legitimate and works as advertised. Saved me hours of frustration and potential mistakes on my return.

Just to add my experience as someone who went through this last year: the passive loss rules are different from the QBI rules. When you fully dispose of a passive activity (like closing your LLC), you can generally deduct all accumulated passive losses in that final year. However, the QBI loss carryforward isn't tied to the existence of a specific business entity. It follows you personally and carries forward indefinitely until you have positive QBI in the future. Without any future business income, that particular carryforward might never be used.

Has anyone used TurboTax or similar software to handle these loss carryovers from closed businesses? I'm in a similar situation and wondering if the mainstream tax software can correctly handle these situations or if it's worth paying a CPA one last time.

As someone who recently went through a similar situation with closed business entities, I'd strongly recommend getting professional help one more time to ensure you handle these carryovers correctly. The rules around passive loss disposition and QBI carryforwards can be tricky, and making mistakes could cost you significant tax benefits or trigger an audit. If you're determined to DIY, make sure you have all your prior year tax documents showing the original sources of these losses. You'll need to trace back to the Forms 8582, 8582-CR, and Form 8995-A from previous years to properly calculate what becomes deductible versus what carries forward. The passive losses should indeed become fully deductible in the year of complete disposition, but you'll need to prove the businesses were completely closed and disposed of. Keep documentation like final bank statements showing zero balances, state dissolution certificates, and any asset sale records. For the QBI loss carryforward, unfortunately that's likely going to remain unused unless you generate qualifying business income in the future. There's no mechanism to convert unused QBI losses to ordinary deductions when you permanently exit business activities.