Discussion:Investment write off
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| Revision as of 14:18, 28 September 2009 RoyDaleOne (Talk | contribs) (The filing of ba) ← Previous diff |
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| + | {{ForumReplyPost|UserID=Irsfixer|Date=28 September 2009|Text=So that's what they meanm by the "n" word. You should apologize. That and the profile thing.}} | ||
Current revision
Discussion Forum Index --> Basic Tax Questions --> Investment write off
Discussion Forum Index --> Tax Questions --> Investment write off
Tsaccounting (talk|edits) said: | September 27, 2009 |
| I have a client who had invested approx 250k in a friends business few years back. The business was closed n the friend filed for bankrupcy n my client will not be able to get his investment back. Can my client write off this loss on his taxes. If yes what form should he fill out n does he need to issue ne thing to his friend? | |
| 27 September 2009 | |
| It's a non-business bad debt. It's deductable on Sch D as a capital loss. | |
| 27 September 2009 | |
| This sure doesn't sound like a tax pro to me.
You also need to look at the proper year for claiming this loss plus what documentation you have supporting this was a valid loan or investment. The proper year would be when the party the loan was made to filed for bankruptcy. You cannot pick and choose which year to put this on the return. Capital loss limit is $3,000 per year and excess carries over. | |
Tsaccounting (talk|edits) said: | September 27, 2009 |
My client has relevant documentation I.e promissory note n the time of bk. However the loss is approx 200k n
he can write off only 3k each year. Is there any other options? | |
| 27 September 2009 | |
| Based upon the language in the OP, it is a bad investment - not a bad debt. Therefore, Sec. 165(c)(2) should come into play. If so, the loss would end up on Line 28 of Sch A via Form 4684 Part B if theft relevant. | |
Harry Boscoe (talk|edits) said: | 27 September 2009 |
| Theft? Who said anything about theft?
And how was the investment made? Was it a loan? Was it stock? What type of entity was the business? I would like to say that the right year to write this off would be the year of the bankruptcy filing but alas I can't say that. First the investment is $250K and then just a few minutes later it's only $200K. Did he collect something on it between the first and the fourth post to this discussion? | |
| 27 September 2009 | |
| Murky info here Harry. Well I'm back to the next tax return.... | |
Death&Taxes (talk|edits) said: | 27 September 2009 |
| "Murky info here Harry."
What else is new? You will learn, Kathi, that to post here you can become like a doctor trying to diagnose an illness over the telephone. One more possible clue: "My client has relevant documentation I.e promissory note n the time of bk." Sounds like the note wasn't executed until the filing of the bankruptcy, if that is what 'bk' means, and not Burger King. Heaven help us what 'n' is! | |
Harry Boscoe (talk|edits) said: | 28 September 2009 |
| "'n'" is how young people whose time seems to be more valuable than the effectiveness of their communication choose to abbreviate "and". | |
| 28 September 2009 | |
| Death&Taxes - Yes I saw that and decided wasn't worth my effort to delve into and dropped out of this one....I'm on the billing clock and more worthwhile things await! | |
| 28 September 2009 | |
| maybe the guy/gal should update his/her profile with 'n'
| |
Harry Boscoe (talk|edits) said: | 28 September 2009 |
| I feel scathed. | |
Tsaccounting (talk|edits) said: | September 28, 2009 |
| Sorry the investment was of 200k. A promissory note was drawn for the full amount. The bankrupcy took place in 2008. | |
Tsaccounting (talk|edits) said: | September 28, 2009 |
| I am also sorry a about the "n". | |
RoyDaleOne (talk|edits) said: | 28 September 2009 |
| The filing of bankruptcy may or may not trigger a deduction. | |
| 28 September 2009 | |
| So that's what they meanm by the "n" word. You should apologize. That and the profile thing. | |
