I need guidance on the best way to claim a business loss. Background facts
1. I owe taxes
for 2005 that I would like to offset by business loss.
2. In 12/2006 my wife bought a business for 300K (trade name and good will and expected business performance based on previous years books), plus the real estate for 650K.
3. Ran the business for the full year, did not perform as expected, shut down business 12/07, lost the real estate 12/07. We were scammed but pursuing that legally - I need the IRS off my back for now.
4. For 2006 I have a AGI not related to the business of about 240K and want to find a way to off-set that income plus 2005's owed taxes by business loss.
5. Business for 2007 - cash in of about 700K, payments of about 825K...
6. Other facts - paid for business cash with $$ from IRA and home equity.
7. I am at a loss as to how to claim the business loss? Reading the rules
is not getting my anywhere...I need to know how best to claim the loss (300K invested in 2006). Help.