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Stephen G.
Stephen G., Financial Advisor
Category: Capital Gains and Losses
Satisfied Customers: 7147
Experience:  Senior Tax Expert; CPA/PFS(retired)Personal Financial Planner; Small Business & Professional Mergers & Acquisitions
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Dear Sirs, Three years ago my business (a general partnership)

Customer Question

Dear Sirs, Three years ago my business (a general partnership) discontinued operations. At that time my business shut down I had put over 30,000 in non-reimbursed investment into that business. At the end of the tax year in which my business had closed, my CPA/Accountant told me that my lost business investment could not be written off on my Federal income taxes as a business (or any other type of) write off loss. Do you think that she was correct or incorrect?
Thank you in advance for your prompt assistance.
Jim Neal
Plano Texas
Submitted: 2 years ago.
Category: Capital Gains and Losses
Expert:  Stephen G. replied 2 years ago.
Hello, my name is***** & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.
It's hard to tell from the limited information you provided.
If the partnership incurred net losses over the periods (years) that it operated; then your share of those losses would have been reported to you on a K-1 each year & as a result, those losses would have normally been deducted by the partners in the years that they were incurred by the partnership & "passed through" to the partners.
In that situation, your investment in the partnership would have been reduced by those losses and you may have had no remaining tax basis in your original investment. In that case, there would have been no remaining deductions available related to your original investment.
Normally, she would have explained that to you when you dissolved the partnership. That would be one situation that comes to mind that would explain why there was no remaining tax basis (original investment) in the partnership, particularly if you didn't receive any distributions from the partnership during your period of ownership.
Please let me know if you have any further questions or if the partnership was profitable without making any distributions, which would then make my possible explanation inapplicable in your circumstances.
Expert:  Stephen G. replied 2 years ago.
Update 7/10/2015:
Do you have any questions or may I clarify anything for you?
If not, please remember to rate my response as that is the only way we receive credit for our work.
Thanks very much.