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Rakhi Vasavada
Rakhi Vasavada, Financial and Legal Consultant
Category: Finance
Satisfied Customers: 2607
Experience:  Graduated in law with Emphasis on Finance and have have been working in financial sector for over 12 Years
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1) if i invest in a friend's private company, is that money

Customer Question

1) if i invest in a friend's private company, is that money tax deductible this year?
Submitted: 9 months ago.
Category: Finance
Expert:  ABC Accounting Group replied 9 months ago.

Hi. Thank you for requesting me.

A couple of questions - is the private company a partnership - are you going to be a partner in it?

Is the private company just starting up?

Thank you.

Customer: replied 9 months ago.
just starting. I'm not an official partner but on board of advisers.
Customer: replied 9 months ago.
but if i was a partner--would that help?
Expert:  ABC Accounting Group replied 9 months ago.

Yes.

Most of it, for tax purposes, is a startup investment and is considered as capital expenses. You can deduct part of it, though, as follows:

You can deduct up to $5,000 in start-up costs. You can also deduct up to $5,000 if you spend it organizing the company as a partnership.

Customer: replied 9 months ago.
But what about a simple private investment if I'm not a partner.
Expert:  ABC Accounting Group replied 9 months ago.

If it is similar to a personal loan to a company, it is not tax-deductible - only if it is not paid back later on (company cannot pay it back) - then it can be taken as a capital loss.