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Hi, my name is Mark. I will be happy to help you with your question. Yes, you may be able to claim this amount as a loss on your return. This will depend on whether you already claimed the loss. How long has the LLC been in business?
You would need to make sure that you are not double counting the loss. If you review the K-1's for each year the total losses should not be more than what you contributed to the LLC and the amount you paid for the loan.
A long is recorded as a liability. Let me give you an example. Let's say a LLC is started out with a loan of $100,000. The balance sheet will show $100,000 in cash and a liability of $100,000. During the year the LLC lost $100,000. Cash is now decreased to zero and the capital accounts will show a negative $100,000. The members would only be able to deduct the loss if they had basis or were at risk. If the members were personally responsible for the loan they would be able to take the loss in the year it occurred. If not the loss would be suspended. If this is the case then the loss would be available if the loan is repaid.
I am sorry I did not mean to confuse. The point I was trying to make is that the loss may have already been claimed on your return. The loss could be separate from paying the loan off.
You would need to let your accountant know that you paid off the loan personally. The amount of loss that you claimed over the years should equal what you paid into the LLC plus the loan that you paid off.
It is possible that you may have already claimed the loss.
The loan documents should be sufficient to substantiate the loan. You would also want to show that you paid the loan (so a cancelled check or debit from your bank account). A statement from the lender showing that the loan is paid is also helpful.
It was my pleasure.
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