Article Date:
April 2022

Word Count:



Grouping: Tax Strategy for Owners of Multiple Businesses

When you own more than one business, you need to consider the grouping rules that apply for passive-loss purposes.


Should one of your businesses lose money, you may not deduct the losses from that business during the current tax year unless you



materially participate in the business or, if grouped, materially participate in the group; or


do not materially participate but have passive income from other sources against which to deduct your passive business losses.


Example. Sam Warren, MD, operates a medical practice and starts a new physical therapy business (his second business) in which he will not materially participate. The physical therapy business is going to lose money during its first years of operation. If Dr. Warren wants to deduct the losses from his physical therapy business, he has ... Log in to view full article.

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