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BK-CPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 933
Experience:  Owner of a CPA firm
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I owned a small business for 7 years that lost its lease unexpectedly.

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I owned a small business for 7 years that lost its lease unexpectedly. I had an investor that we weren't' able to pay back before the closing. What do I need to do for him to be able to take that investment/loan as a tax deduction?
Submitted: 6 years ago.
Category: Tax
Expert:  BK-CPA replied 6 years ago.

If you sent a final schedule K-1 for your business, you've done what you have to. The investor's accountant is mistaken.


The investor should record a bad debt loss on Schedule D in the year his loan to your company became worthless, if applicable.


Losses on the partnership / S-corp interest (given schedule K statements had been sent) would be subject to certain tax treatments depending on the investor, but the investor's accountant needs to help him with that. A final K-1 signifies the business has been closed. If the investor's accountant needs more information, he/she should ask you for it directly.


Tell your investor to have his accountant call you directly and put a stop to this nonsense.



Thank you for your question.

Edited by BK-CPA on 5/3/2010 at 12:03 AM EST
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