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RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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I own a sole-proprietorship business that acts resells ...

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I own a sole-proprietorship business that acts resells computer hardware/software. In May 2007, my wife and I entered into a contract to purchase a second home in a country club community in Huntsville, AL to be used for customer entertainment/personal use and to setup official space to run the business. Between the deposits and upgrades to the home, we paid the Seller/Builder $46,000 to accomodate necessary changes to the property for its intended purposes. In June 2007, I separate from my full-time employer and as a result we were unable to close on the property. Therefore, can any of the paid monies be deducted against either personal income or my Schedule C for the business?
Submitted: 8 years ago.
Category: Tax
Expert:  RD replied 8 years ago.

To the extent the payment to the builder would be considered as payment towards changes to accomodate official space, this loss will be considered as business loss and can be deducted on sch c.

However, the important/crucial issue here for you would be to prove that the payments was related to improvements for business use.


Let me know if you have any question.


Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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