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Tax law question. We bought a company in 2011. The previous…

Tax law question. We bought a...
Tax law question.
We bought a company in 2011. The previous owner financed it for us. Are our payments for the company a deductible expense?
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Answered in 11 minutes by:
3/26/2018
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Hi. …. My name’s Lane,

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents, since 1986.

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Customer reply replied 27 days ago
Tax law question.
We bought a company in 2011. The previous owner financed it for us. Are our payments for the company a deductible expense?

The interest portion of the payment is deductible as business loan interest.

...

But, so sorry, the principal part of the payment ( although it DOES add to your tax basis, meaning that it would lower your capital gain on any sale of the business ... and also allows for any operating losses to be deducted) isn't CURRENTLY deductible.

...

The seller should have provided an amortization schedule. In looking at this you'll notice that in the early years almost all of the payment IS interest,

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Lane

Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
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Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Lane
Lane
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