What are my options? If you add up what I borrowed the business including the interest and penalties for early withdrawals it adds up to more than I owe the Feds and State. The LLC is stable but no in the position to pay me back.
Besides suing are there other tax relief options available?
2. verbal, I gave the money to the business from my checking account
3. Summer of 2012
Obviously I did not realize the tax ramifications of what I was doing and now I am facing something I can not pay back very easily. No bank will give me a load because I have no collateral.
If the business cannot afford to pay me back of I am not let back into the business what are my options from a tax relief standpoint?
Hello and thank you for using Just Answer, As you were no longer involved in the business, you may have a Bad Debt that you could claim on the loan to the business or your sister-in-law. If someone owes you money that you cannot collect, you may have a bad debt. There are two kinds of bad debts – business and nonbusiness. Generally, a business bad debt is one that comes from operating your trade or business. Unless you are in the business of making loans then your's would be a nonbusiness bad debt. Nonbusiness bad debts must be totally worthless to be deductible. You cannot deduct a partially worthless nonbusiness bad debt. A debt becomes worthless when the surrounding facts and circumstances indicate there is no reasonable expectation of payment. To show that a debt is worthless, you must establish that you have taken reasonable steps to collect the debt. It is not necessary to go to court if you can show that a judgment from the court would be uncollectible. You may take the deduction only in the year the debt becomes worthless. You do not have to wait until a debt is due to determine whether it is worthless. You will need to show though that there is not an expectation that you will be able to collect. A nonbusiness bad debt deduction requires a separate detailed statement attached to your return. You will have to state all the circumstances of the loan and why it is not collectible and why you determine you will not be able to collect in the future. A nonbusiness bad debt is reported as a short-term capital loss on Form 8949 (PDF), Sales and Other Dispositions of Capital Assets, Part 1, line 1. Enter the name of the debtor and “bad debt statement attached” in column (a). Enter your basis in the bad debt in column (e) and enter zero in column (d). Use a separate line for each bad debt. It is subject to the capital loss limitations. The limitations mean that if your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately. Of course you would be allowed to carryforward the loss. I sincerely XXXXX XXXXX is helpful.
Please let me know
1. I would like to write off the money I gave the LLC including the taxes and penalties I found out I had to pay for early withdrawals. Then I would like to make monthly payments until it is paid off.
2. I will review form 656-B