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cfortunato, Attorney
Category: Bankruptcy Law
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Experience:  Bankruptcy professor.
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My wife and I have a General Partnership business (husband

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My wife and I have a General Partnership business (husband and wife partnership). This GP business is an equity and forex day trading business w trader tax status which we have had succesfully in place since 2007 w a day trading-expert accountant. We also have had salary employment income for the last 12 months. We lost a lot of money (NOL) in the GP business and those losses offset our employment income so that we do not show actual income and therefore do not owe income taxes for 2010 and probably for 2011 as well (because of the Net Operating Loss carry forwards). This being the case, can we file for Ch 7 or 11 (full liquidation) even though our "employment income salaries" exceed (are about) $120k/year? I heard that if we have income above a certain amount we cannot qualify for file Ch 7 (only ch 13); but my question is, do they consider and calculate our income based on our employment salaries only, or will the court take into consideration the business losses offset, and thus allow us a ch 7 (full liquidation) filing?
Submitted: 5 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 5 years ago.
Hi JACustomer,
You cannot deduct a business loss from your employment income to qualify for filing a Chapter 7 Bankrutpcy. (If you have business profit, you have to include that profit when determining whether or not you qualify, but if you have a business loss, you cannot subtract that loss.)

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