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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16559
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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We have a client in the construction business who build and

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We have a client in the construction business who build and sold several homes. When the market collapsed, he rented the remainder of the homes that were not sold. Dueing 2012 he bought one of the homes at a loss. Since he is a related party (Shareholder of the company) is the loss not reportable for tax purposes?

MyVirtualCPA :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

MyVirtualCPA :

How are you today

MyVirtualCPA :

Sec. 267 was enacted to disallow certain losses and deductions on transactions between related taxpayers

MyVirtualCPA :

Sec. 267(a) disallows two specific types of deductions: (1) a loss on the sale or exchange of property between related parties and (2) a deduction for a payment to a related party who has not included the item in income.

MyVirtualCPA :

CLICK HERE for more details

Customer:

Thank you. I told the client we could not deduct the loss, and he stated another accountant said it was deductible

MyVirtualCPA :

Well now you have the section to quote

MyVirtualCPA :

:-)

Customer:

Thanks.

MyVirtualCPA :

You're welcome

MyVirtualCPA :

If you would, please take a moment to rate my response as "excellent" so that I may receive credit for assisting you today

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Alyce,

Thank you for your positive rating. Please come back and visit MyVirtualCPA any time you have a tax, finance, or social security question. It was a pleasure working with you today.

Thanks for the direct request as well!