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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28084
Experience:  Taxes, Immigration, Labor Relations
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Can I claim deductions funds I used on behalf of my c corp

Customer Question

Can I claim deductions for personal funds I used on behalf of my c corp
JA: Thanks. Can you give me any more details about your issue?
Customer: Well my business hold events, and makes most of the money from ticket sales at the event. However, upfront costs last year were $25k more than the business had on hand. I used my personal checking a credit card to cover these costs. Unfortunately, eventual sales were low so there wasn't money to get reimbursed. So can I post this as a persdonal loss?
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Submitted: 10 months ago.
Category: Tax
Expert:  Lev replied 10 months ago.

Taxes are paid on income that we receive.

When you PAY - that is not your income - that is your expense - and there is no tax liability for expenses.
However as that are expenses you personally pay for C-corporation - that amount is classified as your contribution to C-corporation and it is added to the basis you have in C-corporation shares.

Expert:  Lev replied 10 months ago.

Whether C-corporation may DEDUCT these expenses is a different issue - if these are qualified business expenses - they are deducted on form 1120.

But because these are expenses of C-corporation - you may not claim as your personal loss as long as you own shares of that corporation.

As you are an employee of C-corporation - C-corporation may reimburse you for these expenses - so you will receive the money tax free under an accountable reimbursement plan. And because they woudl be tax free for you - you woudl not need to deduct reimbursements.

But again - C-corporation is completely separate entity - and will need to deduct its own expenses.

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