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Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 3930
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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a person owes money he borrowed for business purposes. he now

Resolved Question:

a person owes money he borrowed for business purposes. he now makes monthly payments/ quaterly payments back to the people he borrowed from. the money that gets paid back can it be considered a business expense so taxes are not paid on that.
Submitted: 5 months ago.
Category: Tax
Expert:  Stephen G. replied 5 months ago.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

What was done with the proceeds of the loan?

Customer:

i invested it in the market in 2007

Stephen G. :

Well, that wouldn't be a business expense as you had assets to show for the loan proceeds.

Stephen G. :

Therefore the payments wouldn't be deductible as business expenses. You could deduct the interest expense as investment interest on your tax return.

Customer:

there were no proceeds i lost the principal

Stephen G. :

Well then you would have capital losses you could claim whenever you sold the securities.

Stephen G. :

Questions?

Customer:

it was a reverse merger the company never ended up even trading. when things hit in 2008 it shut down the small cap ipo and reverse merger business

Customer:

if i make 300 dollars and i am paying back 100 can i just file for the 200 on my taxes or do i have to file on all 300

Stephen G. :

Well, if you invested the loan proceeds in that company, you should have claimed a loss on worthless securities when it became worthless.

Stephen G. :

No. The 300. would be taxable income.

Stephen G. :

The 100. would not be deductible.

Customer:

is there anyway of setting it up that it could be

Stephen G. :

You see, whatever was done with the loan proceeds is what determines how it is treated for tax purposes.

Stephen G. :

The loan repayment doesn't trigger a tax event except if there is interest expense involved.

Customer:

oh so the intrest on the loan can be deducted

Stephen G. :

Yes, as investment interest expense - an itemized deduction.

Customer:

and the loos that i had i can apply that to my 2008 taxes

Stephen G. :

You could have applied it to 2008 but the statute of limitations has run on 2008 unless you haven't filed your tax return for 2008.

Customer:

ok

Stephen G. :

If you want to contact me again with any tax or financial questions, you can just ask for "Steve G" at the beginning of your question. Thanks again for using us for your tax and financial questions. You may get a short survey from the site; if it isn't too much trouble I would appreciate it if you would answer it; the survey results are used by the site as an additional tool to rate our performance;

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Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 3930
Experience: Extensive Experience with Tax, Financial & Estate Issues
Stephen G. and 2 other Tax Specialists are ready to help you

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