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emc011075
emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2301
Experience:  IRS licensed Enrolled Agent and tax instructor
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In 2013 me and my partner sold a small llc. In that year we

Customer Question

In 2013 me and my partner sold a small llc. In that year we earned 300K profit and used it to payback a loan that was taken out the previous year. I am told that the 300K is taxable and that me and my partner are liable for the tax. We never recieved any personal income but are now liable for a large chunk of tax???
Submitted: 11 months ago.
Category: Tax
Expert:  emc011075 replied 11 months ago.

Hi. My name is ***** ***** I will be happy to help you.

Do not shoot the messenger here but he is correct. Profit from LLC/partnership is included in your taxable income, REGARDLESS what you do with the proceeds. Because receiving a loan is not taxable (it is not included in your taxable income and/or increase your profit), repayment of the loan is not deductible (cannot be used to reduce the profit). You can only deduct the interest of the loan.

Sorry, if that's not answer you were hopping for.

Expert:  emc011075 replied 11 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

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