The sponsor's deck shows a big year-one loss. Can I actually use it?

Often not in the year it shows up. A syndication is a passive activity, so under Section 469 the loss can only offset other passive income. If you are a high-W-2 earner with no other passive income, that loss is suspended and carried forward, not deducted now, unless you or your spouse qualify for Real Estate Professional Status under Section 469(c)(7) with material participation. Active participation and the $25,000 rental allowance do not apply to a limited-partnership interest, so for most LPs that door is closed. The deck rarely says this. It is also only the federal answer: states such as California, New York, and New Jersey do not conform to federal bonus depreciation, so the state result can differ, and the loss can be limited even earlier by Section 704(d) basis or Section 465 at-risk rules. I check your actual tax situation and tell you whether the year-one loss is real money to you or a number that just sits on a carryforward schedule until you have passive income or you exit.

What is my real after-tax return on this deal?

The deck shows a pre-tax IRR and equity multiple. What you keep is net of depreciation recapture at exit, the capital-gains and net investment income tax, and state tax, less whatever year-one loss you were actually able to use. On a cost-seg-heavy deal the gap between the pre-tax pitch number and the after-tax number you keep is routinely several points of IRR. I model the after-tax number on your bracket so you compare deals on what you keep, not on what the deck advertises.

How big is the tax bill when the deal sells?

Bigger than most LPs expect, because the depreciation that generated those early losses comes back as recapture at sale. Personal-property cost-seg deductions recapture at ordinary rates under Section 1245, and the building's depreciation recaptures at up to 25 percent under Section 1250. The reported taxable gain at exit can be well above the real economic gain. I forecast that exit-year spike years early, so it is a planned number and not a K-1 surprise.

I invested years ago and have suspended losses piling up. What do I do with them?

Those suspended passive losses are an asset most LPs forget they own. They free up when you have passive income to absorb them, and the full suspended amount generally releases in the year you completely dispose of that activity. If a deal is winding down, foreclosing, or being sold, the timing of that release, and how it lines up against the gain or cancellation-of-debt income, decides whether you owe tax or walk away clean. I review your K-1s and basis and map how to use what has piled up.

Do you file my taxes or replace my CPA?

No. This is independent, non-attest advisory work. I do not prepare or file returns, and I do not replace the CPA who files yours. I read the deal and your K-1s, model the after-tax outcome, and hand you analysis you and your preparer can act on. You keep your filing CPA; I am the second read that sits on your side of the table.

Aren't you on the sponsor's side?

No. I do not broker deals, take a commission, or get paid by any sponsor, so the read is the same whether or not you invest. The sponsor is selling, which makes their deck a sales document, not a lie. Nobody in that transaction is paid to read the numbers from the limited partner's tax seat. That is the seat I read from. The one line I hold: I will not advise a limited partner on a specific deal that I helped that same sponsor raise.

Don't wire six figures into a syndication until you know your real after-tax return.

I'm a CPA and former Big 4 fund auditor. The sponsor's deck is built to raise the money, not to tell you what you keep. Before you commit capital, I read the same deal from the one seat nobody in the transaction is paid to sit in: yours. Whether you can actually use the year-one loss, what your real after-tax return is once recapture hits at exit, and how big the exit-year tax bill will be, federal and state. Because I don't broker the deal or earn a commission, the read is the same whether or not you invest.

Kasing Ng, CPA, former Big 4 fund auditor

California CPA #139270 · Independent — no commission, no product to push

Can you even use the loss?

A syndication is passive. With no passive income, §469 suspends that year-one loss — unless you or your spouse qualify for Real Estate Professional Status (REPS) with material participation. For a limited-partnership interest, that is the only door.

Your real after-tax number

Net of recapture, NIIT, and state. On a cost-seg-heavy deal that's routinely points of IRR below the pitch.

The exit-year tax spike

Early depreciation comes back as recapture at sale. The taxable gain can dwarf the economic gain. Forecast it early.

Federal is only half the bill

Everything the deck shows is the federal read. Your state can be a different answer entirely. California, New York, and New Jersey do not conform to federal bonus depreciation, so the year-one loss on your federal K-1 can be smaller or absent on the state return, and a loss suspended on federal Form 8582 can be suspended differently for state. The §1250 25% figure is a federal rate; states tax recapture and capital gain their own way, often as ordinary income with no special rate. I model the state layer too — your state of residence and the deal's state — not just the federal number.

Who this is for

Passive investors in someone else's real-estate deal, where the after-tax number is the number that matters.

High-W-2 passive LPs

You invested for the tax losses. The first question is whether §469 even lets you use them this year.

Multi-deal LPs

Several syndications, a stack of K-1s, and suspended losses building up that nobody is steering.

About-to-wire investors

You have the PPM in hand and want an independent read on the tax math before the money leaves.

LPs in a deal going sideways

A wind-down, capital call, or foreclosure, and nobody has modeled the tax on the way out.

Run the first cut on your own numbers

Two free calculators do the first pass of the pre-wire read right in your browser. Plug in the deal and your bracket before you ever book a call.

After-tax estimator — how much of a deal's year-one loss a passive LP in your bracket can actually use.
Exit tax calculator — what a sale really costs: recapture, capital gain, NIIT and state, and what a 1031 would and wouldn't defer.
3 questions to ask your sponsor — what a good answer sounds like before you wire, and the answers that should make you pause.

Start here: a Pre-Wire Deal Review

Before you commit capital, send me the PPM or deck and your last return. I'll tell you three things the deck won't, in plain language, in a short memo you can keep.

Before you wire

Pre-Wire Deal Review

$750 flat, one deal

The deck sells the year-one loss as the headline. I check whether you can actually use it on your return, model your real after-tax return once recapture hits at exit, and size the exit-year tax bill so it's a planned number and not a K-1 surprise. If the deal is good, it will still look good; you'll just know the real number.

Will your year-one cost-seg loss offset your W-2 income, or sit trapped on Form 8582 — and do §704(d) basis or §465 at-risk limits block it before §469 is even reached?
Your after-tax IRR and equity multiple on your own bracket, not the deck's pre-tax pitch
The exit-year recapture: §1245 ordinary on the cost-seg slice, §1250 capped at 25% federal on the building — plus how your state taxes the gain, often as ordinary income with no special rate
Whether this deal is matched to you as a holder, or whether the tax story only works for someone in a different seat
Delivered as a short plain-language memo you keep, with the questions worth asking the sponsor before you sign

See a one-page sample memo (PDF) — illustrative, fictional deal; shows exactly what lands in your inbox.

Already invested: Read Your Own K-1

A K-1 shows up every spring and most LPs hand it straight to their preparer without knowing what it's telling them. A low-friction read on a single K-1.

At K-1 time

Read Your Own K-1

$475 flat, single K-1

What is this number actually doing on my return? I read one investor K-1 and tell you, in plain English, what's deductible now versus suspended, how your capital account and basis are tracking, what the passive-loss carryforward is building toward, and whether anything on it looks off before it reaches your preparer. This is an independent read for you, the limited partner; it is not a review of the partnership's whole 1065, and I don't file your return.

What on the K-1 you can deduct this year versus what §469 suspends and carries forward
Your tax-basis capital account and at-risk basis, and what they mean for using losses and taking distributions tax-free
The suspended-loss carryforward you're building, and when it frees up
A heads-up on anything that looks misallocated before you hand it to your preparer

When a deal goes sideways: Exit-Year & Suspended-Loss Workout

A deal winding down, foreclosing, or being sold triggers the tax you've been deferring all along, and the suspended losses you've been piling up. The timing between them decides whether you owe or walk clean.

Wind-down & distress

Exit-Year & Suspended-Loss Workout

quoted, by situation

Those suspended passive losses are an asset you forgot you own. When you fully dispose of the activity, the whole suspended amount generally releases, and it has to line up against the gain, the depreciation recapture, and any cancellation-of-debt income in the same year. Get the timing and the basis right and a painful-looking exit can net to little or nothing. Get it wrong and you pay tax on money you never saw. I pull your K-1s and basis history and map the release.

The suspended §469 losses freed at full disposition, matched against the exit-year gain
Recapture and cancellation-of-debt income on a foreclosure or deed-in-lieu, recourse versus nonrecourse
Negative capital account and the gain it can force even when you receive nothing
Insolvency and timing levers, mapped for you to take to your preparer

Independent, non-attest advisory. I model and map; I do not file your return or provide legal advice. Work alongside your own CPA and counsel.

Pricing at a glance

Service	What it is	Price
After-tax & exit tax tools	Run the first cut on your own deal in the browser	Free
Pre-Wire Deal Review (start here)	Read a syndication from your seat before you commit: can you use the loss, real after-tax return, exit-year bill	$750 flat
Read Your Own K-1	Independent plain-language read on one investor K-1 at tax time	$475 flat
Exit-Year & Suspended-Loss Workout	Map the suspended-loss release and exit tax on a sale, wind-down, or foreclosure	quoted
Advisory, hourly	One-off questions on a deal or a K-1	$275/hr

Flat-fee, no hourly meter. Final pricing is confirmed in a short call and set in a signed engagement letter before any work begins. A deal with contributed property, tiered waterfalls, or a complex distress posture is quoted individually.

How it works

Send me the deal, or the K-1

A short call to scope it, then you send the PPM or deck and your last return for a pre-wire review, or the K-1 and prior-year carryforward for a K-1 read. Your documents are confidential client material; I'm glad to sign an NDA before you send anything.

I model it from your seat and write it up

I run the after-tax math on your own bracket and hand you a short plain-language memo, with the figures you can trace and the questions worth asking.

You act on it with your own CPA

You keep the preparer who files your return. I'm the independent second read that sits on your side of the table, and I hand you analysis you and your CPA can act on.

Why work with me

Kasing Ng, CPA
California license 139270 · Former Big 4 fund auditor · Builder of CREDevSim

I'm a California-licensed CPA and a former Big 4 auditor who audited institutional real-estate funds, so I've read these deals from the inside. I built CREDevSim, a genuine after-tax engine covering §469 passive-loss limits, §1245 and §1250 recapture, 1031 exchanges, and bonus depreciation, on top of full underwriting and waterfall math. When I read your deal, I'm running it off an engine I wrote. And because I don't broker the deal, take a commission, or get paid by the sponsor, the read you get is independent of whether you invest. The one line I hold: I won't advise a limited partner on a specific deal I helped that same sponsor raise.

If you want the background, here is how most models get after-tax LP returns wrong, and what LPs actually keep after cost seg and recapture.

Why I don't file your return

It's the point, not a limitation. Filing CPAs process history after the tax year closes; by the time your K-1 is cut, the decisions are already made. My focus is the opposite, and earlier: forward-looking deal intelligence, the tax read before you commit capital, while you can still act on it. I model whether you can use the loss, what your real after-tax return is, and when your banked suspended losses free up, then hand it to the preparer who files. Independent and non-attest: I don't audit, review, or file returns, and I don't replace your CPA.

Have a deal in front of you? Send me the PPM and your last return, and I'll tell you honestly whether I can add value and what it would cost. No obligation. Book a free 15-min intro call → Prefer email? kasing@credevsim.com Call or text: (415) 617-5270