How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask jgordosea Your Own Question

jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3038
Experience:  I've prepared all types of taxes since 1987.
3653323
Type Your Tax Question Here...
jgordosea is online now
A new question is answered every 9 seconds

I have a personal loan to a company I have stocks with. They

Resolved Question:

I have a personal loan to a company I have stocks with.
They owe me money.

I am now asked to leave the company with a bit of money for the stocks, but land in trade for the main money I loaned them.
I'm also asked to give up more land, that I have a personal liability on, and the personal liability will be wiped at that time.

The loss is around 150k.

Tax wise, how does this work ?

example will the 150k loss continue each year until I reach that amount ?
or is it only good for one year ?

My average that I owe in taxes each year is 5-40k depending on land that might sell or not. (that land is not related to the land I will have to give up, to be released from personal liability)
Virginia area.
Submitted: 1 year ago.
Category: Tax
Expert:  jgordosea replied 1 year ago.

Greetings,

 

If the loss is a capital loss then you use that in the year of sale to offset any capital gain from other sales plus up to 3,000 of ordinary income.

Any capital loss that remains from the year is carried forward and the same process is used each later year of offsetting capital gain for the year plus using another 3,000 to offset ordinary income (wages, dividends, interest, etc).

The capital loss is continued to be carried forward until it is all used or your death, whichever comes first.

 

An ordinary loss (such land that is inventory in the trade of business of selling land) would be applied in full in the year of the sale and not limited like the capital loss.

 

More details and links can be found at http://www.irs.gov/taxtopics/tc409.html

 

Please ask if you need clarification.

Thank you.

 

 

Customer: replied 1 year ago.

I am a co-owner of a nursery business (S-chapter) with a growing farm in another county. Due to the economy, I have invested monies into the business during the last few years to keep it solvent. The farm is in the owners names and reported on their individual taxes. The company pays for the bank loan, taxes, etc. through rent, and I have a personal liability on the loan for the farm.


 


I am looking to retire from the business. There are no considerable monies in the business to reimburse me. They will pay me a small fare for my stock in the business, and give me a parcel of land and buildings in exchange for my investment.


 


They want me to give up the farm land to the company in exchange of my being released from the personal liability.


 


This land is listed as me being a co-owner, so if I give it up is it a capital loss to me?

Expert:  jgordosea replied 1 year ago.

Hello again,

 

Merely being listed as a co-owner does not, in itself, give you any cost or basis in the land since you had said the economic risks and benefits are "in the owners name"

 

From the limited facts presented the land is a capital asset. Whether you will have a gain or loss depends on the value of the land you will get as compared to the principal remaining on the loan.

 

Since you are a shareholder there will also be a capital gain or loss on your disposition of your stock in that corporation. Again, this may be a gain or loss depending on your cost basis of the stock compared to whatever consideration you get for the stock.

 

From your description it seems that there is one planned sale, or exchange, involving all of the items you mentioned. Of course, this should all be documented in a sales agreement with legal advice. It could be structured as two transactions but the net effect for tax purposes will be the same if both occur in the same tax year.

 

Basically, I am saying that these are capital assets (from your description) and you can estimate your gain or loss by comparing your total cost of these items to the value you will get for the assets.

For a more accurate computation of the gain or loss it is advisable for you to engage a tax practitioner that you can consult with all of the detailed facts and amounts for the land, loan, small fare and S corporation stock.

 

Based on that analysis it may be possible or beneficial to use two transactions in separate years or to leave it as one sale, or exchange, within one tax year.

 

Hope that clarifies for you even though you should get a more detailed analysis based on all the facts and circumstances involved. Let me know if you need further clarification, please.

Best wishes.

jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3038
Experience: I've prepared all types of taxes since 1987.
jgordosea and 8 other Tax Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.