Question

Payment of Business Loan as Loan Guarantor

Forum|Forum|5 years ago
January 23, 2021
1 reply
0 views

I was one of four loan guarantors for a small business. The loan company called the loan as they expected the business to declare bankruptcy. I, with the other three guarantors, had to pay the loan off. Does the amount I had to pay get written off as a capital loss?

T

ThomasM125

If the loan was a business loan, in other words created or acquired in a trade or business or closely related to such, then you deduct it as an ordinary expense on your business tax return or schedule C. Otherwise, it would be treated as a short-term capital loss on form 8949.

You can learn more about it by using this link:

https://www.irs.gov/taxtopics/tc453

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"