Ask a Business Lawyer. Get Business Law Questions Answered ASAP.
So even though I am on a cash basis, and have a promissary (sp) note saying he will pay me, I can not deduct the uncollectable monthly payments as a "bad debt" each year? This would offer me more benefit than either the first or second option.
There would be no assets that I would want back, and he has since turned over the operation of the store to someone else (though I do not know any specifics of their transaction). I do not expect to get anything from him, but am looking for the option that will give me the best benefit from a tax standpoint.
I think I understand what you are saying, and after this question, I will pay you accordingly.
I am already taking a $3000 capital loss each year from my previous sale. There is really very little activity in my S corp now. Therefore, I was hoping there was a way I could simply put the $6600 in missed payments each year in the "expense column" as an uncollectible debt, and realize a more immediate tax benefit. Am I hearing you say I cannot legally do that?
If I cannot do that, then my best next step is simply to go to small claims court each time he has nearly $7500 in payments due, and win a judgement for that specific timeframe. It is your belief that I can go back to small claims multiple times since the payments due are for different time frames. It is unlikely I will ever collect anything, but at the same time it saves me the expense of hiring an attorney to win the total note amount.
I appreciate your insight, and will pay you upon hearing your response to the above.