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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I recently sold a C corp that I owned, along with other family

Resolved Question:

I recently sold a C corp that I owned, along with other family members through an LLC. I was president. In order to settle several back and forth tort claims I agreed to personally make a settlement payer to the buyer. Can I deduct that payment on Schedule E?
Submitted: 2 years ago.
Category: Finance
Expert:  Megan C replied 2 years ago.

MyVirtualCPA :

Thank you for your question, and thanks for using JustAnswer.com

MyVirtualCPA :

How are you today?

MyVirtualCPA :

Typically, this type of agreement would be seen as a contribution to the corporation from the owner, or if you documented it as a loan it would be a shareholder loan

MyVirtualCPA :

You, unfortunately, cannot deduct the payments made personally because they weren't made through the business.

Customer:

You don't even think it's deductible on Schedule A as a Miscellaneous Itemized Deduction?

MyVirtualCPA :

You can deduct employee business expenses as a schedule a deduction

MyVirtualCPA :

but if you were an owner you weren't really an employee

Customer:

Since when can't the owner of a C corp also be an employee?

MyVirtualCPA :

Were you an employee? Did you get paid on a W-2?

Customer:

well no, there was no W-2.

MyVirtualCPA :

Then you were not an employee.

MyVirtualCPA :

Sometimes, owners are paid a salary on W-2

MyVirtualCPA :

Is there anything else I can assist you with today?

Customer:

Not the answer I was hoping for. Thanks.

Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 16538
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 2 years ago.
Thanks for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.