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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4475
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I sold a business with a 5 year payback period. The debtor

Customer Question

I sold a business with a 5 year payback period. The debtor defaulted after 3 years . The firm went bankrupt and there are no assets. CAN I deduct the loss on my personal taxes, at least?
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: that is the question.
JA: Is there anything else important you think the Accountant should know?
Customer: no
Submitted: 8 months ago.
Category: Tax
Customer: replied 8 months ago.
The debtor comoany signed an SBA loan and that loan went bad. The FEDS closed down the firm, the firm went bankrupt ( closed down) the SBA claim is for several million and the firm had few assets. Therefore, I am behind the US . I have not sued because it seems useless.
Expert:  PDtax replied 8 months ago.

Hi from just answer. I'mCustomer I'll assist.

The answer is yes. The amount depends on how you have reported the sale to date.

Once your installment sale method payments won't be made, you can immediately recognize the change in sale and the lid in the year you fix the loss. The year of bankruptcy is likely the year to recognize the loud.

The math is involved, but if you sold expecting $100,000 gain, and recognized $60k of the gain already, you would get to revisit the entire gain or loss and get the overall loss and recover the gain recognized to date.

Thanks for asking at just answer. Positive feedback is appreciated. Your tasting closes out uyour request. I'mCustomer

Customer: replied 8 months ago.
what do you mean " you get to revisit the gain or loss and get the overall loss and recover the gain recognized to date" ?
How??? Since the loss exceeds my taxable income how do I handle it ?
Expert:  PDtax replied 8 months ago.

You will get to claim the loss. Its character will allow you to apply some against other capital gains you might have, and apply the excess to future years.

The calculation of a loss in an installment sale and the application of the loss against other income are involved. I wanted to tell you that the loss was deductible, which was your original question.

I suggest given the size of the loss and the complexity of the calculations that you consider a tax pro to prepare your return.

Thanks again for asking at just answer. Please rate my assistance to close out your inquiry. I'mCustomer

Expert:  PDtax replied 8 months ago.

Hi again.Customerhere.

If my answer meet your needs, please rate my assistance to close out your inquiry. I'mCustomer