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Ask Stephen G. Your Own Question
Stephen G.
Stephen G., Sr Income Tax Expert
Category: Tax
Satisfied Customers: 7097
Experience:  Extensive Experience with Tax, Financial & Estate Issues
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a person owes money he borrowed for business purposes. he now

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a person owes money he borrowed for business purposes. he now makes monthly payments/ quaterly payments back to the people he borrowed from. the money that gets paid back can it be considered a business expense so taxes are not paid on that.

Stephen G. :

Hello, my name isXXXXX & I'll be helping you today. My goal is to give you a complete & accurate answer that you can understand.

Stephen G. :

What was done with the proceeds of the loan?

Customer:

i invested it in the market in 2007

Stephen G. :

Well, that wouldn't be a business expense as you had assets to show for the loan proceeds.

Stephen G. :

Therefore the payments wouldn't be deductible as business expenses. You could deduct the interest expense as investment interest on your tax return.

Customer:

there were no proceeds i lost the principal

Stephen G. :

Well then you would have capital losses you could claim whenever you sold the securities.

Stephen G. :

Questions?

Customer:

it was a reverse merger the company never ended up even trading. when things hit in 2008 it shut down the small cap ipo and reverse merger business

Customer:

if i make 300 dollars and i am paying back 100 can i just file for the 200 on my taxes or do i have to file on all 300

Stephen G. :

Well, if you invested the loan proceeds in that company, you should have claimed a loss on worthless securities when it became worthless.

Stephen G. :

No. The 300. would be taxable income.

Stephen G. :

The 100. would not be deductible.

Customer:

is there anyway of setting it up that it could be

Stephen G. :

You see, whatever was done with the loan proceeds is what determines how it is treated for tax purposes.

Stephen G. :

The loan repayment doesn't trigger a tax event except if there is interest expense involved.

Customer:

oh so the intrest on the loan can be deducted

Stephen G. :

Yes, as investment interest expense - an itemized deduction.

Customer:

and the loos that i had i can apply that to my 2008 taxes

Stephen G. :

You could have applied it to 2008 but the statute of limitations has run on 2008 unless you haven't filed your tax return for 2008.

Customer:

ok

Stephen G. :

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