Discussion:Buisness Bad Debt Expense
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Discussion Forum Index --> Tax Questions --> Buisness Bad Debt Expense
| 4 January 2007 | |
| I am doing work for a individual who is (and we have determined that he qualifies) taking a business bad debt expense for a loan which he guarenteed in his course of employment in his owner-shareholder relationship with his corporation. The treatment I keep finding for this transaction is that he should take it on Schedule A as a miscellaneous deduction subject to the 2% floor. Do any of you know any ability to take this deduction off of AGI as the AMT is crushing the benefit of this deduction.
Thanks, CK | |
| 4 January 2007 | |
| Hi business bad debts are 100% deductible against income I cannot confirm but either as line 21 loss(most likely here) or a 4797 loss(but I doubt here). I know for certain it is not a sch A misc deduction. bye | |
| 4 January 2007 | |
| Wes,
Thanks for the responce, however what I am looking at that is telling me I am locked into the Schedule A subject to the 2% floor is the tax courts Graves v. Commissioner (June 15, 2004). I am looking for any ideas of ways to get around this. Thanks, CK | |
| 4 January 2007 | |
| Hi you got me looking I can only find a line 20 misc sch A business deduction as you have also discovered. I guess I should not ever say "for certain" until certain. :) bye | |
| 4 January 2007 | |
| Riley also: Discussion:Sale of Sub-S Interest | |
Actionbsns (talk|edits) said: | 4 January 2007 |
| I have a client who was going to buy a business, put up earnest money, then prior to close, discovered some information that quelched the sale. In the end they lost the earnest money. In a prior discussion of earnest money lost, it seems the loss is deductible to my client and with the addition of this discussion, I'm thinking the loss will have to be a schedule A loss rather than a 4797 loss. But as with Chriskcpa, if there were a way to put it on a 4797, it would be better. Any thoughts? | |
Death&Taxes (talk|edits) said: | 4 January 2007 |
| I don't know that this discussion would decide Schedule A or not in your matter; if you read the case, Graves was an employee who lent money to try to save his job, so the court more or less treated it as an employee expense. | |
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