Discussion:Loan to start a business
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| Revision as of 00:18, 16 August 2007 TheTinCook (Talk | contribs) (Is there any rea) ← Previous diff |
Revision as of 00:22, 16 August 2007 Gpevan06 (Talk | contribs) (There was never) Next diff → |
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| {{ForumReplyPost|UserID=TheTinCook|Date=16 August 2007|Text=Is there any reason he can't take draw from capital? If it's a bonafide loan you can always repay it, but for a Sole Prop?}} | {{ForumReplyPost|UserID=TheTinCook|Date=16 August 2007|Text=Is there any reason he can't take draw from capital? If it's a bonafide loan you can always repay it, but for a Sole Prop?}} | ||
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| + | {{ForumReplyPost|UserID=Gpevan06|Date=16 August 2007|Text=There was never any formal loan agreement, only the money taken from personal funds to cover operating expenses and to purchase equipment.}} | ||
Revision as of 00:22, 16 August 2007
Discussion Forum Index --> Tax Questions --> Loan to start a business
| 15 August 2007 | |
| How does a sole proprietor recover money loaned to start his business? He used his personal funds to buy office equipment, furniture, etc. | |
TheTinCook (talk|edits) said: | 15 August 2007 |
| Do you mean cost recovery?
It all depends on when and on what he spent his money on. You recover the cost on tangible assets like furniture and office buildings by depreciation. Intangible assets get amortized under Sec. 197. Startup and organization costs can be partially expensed and amortized under Sec. 195. Then there is the incredible Sec. 179. Then there is the issue of a sole proprietor "loaning" money to his sole proprietorship. | |
| 16 August 2007 | |
| I think what he wants to do is recover the money he loaned to the business in the first year to pay the operating expenses since he did not have enough income to cover those expenses. But, I told him that he deducted all the expenses and claimed his loss for the first year, which he was able to use against a large capital gain. | |
TheTinCook (talk|edits) said: | 16 August 2007 |
| Is there any reason he can't take draw from capital? If it's a bonafide loan you can always repay it, but for a Sole Prop? | |
| 16 August 2007 | |
| There was never any formal loan agreement, only the money taken from personal funds to cover operating expenses and to purchase equipment. | |
