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Can I write off business debt paid with personal funds?

Forum|Forum|5 years ago
June 30, 2020
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I was an employee of a business of which I had no ownership, but I was also an officer of the small corporation (Secretary and Treasurer). The business was shut down by a court-appointed receiver in 2009. The California State Board of Equalization (SBOE) came after me for business Sales Tax not paid. After several years of going back and forth, in January 2016 I settled with the SBOE and paid them $2,500 from my personal funds. Can this amount be written off?

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Best answer by RobertG

Probably not.

Usually business taxes are assessed against corporate officers in the form of a penalty.

Penalties are not deductible.

RobertGAnswer

Probably not.

Usually business taxes are assessed against corporate officers in the form of a penalty.

Penalties are not deductible.

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Y

YotabeeAuthor

Thank you @RobertG. After looking back at the settlement paperwork, the SBOE did designate the principal monies owing as "Penalty". It would have been more accurately described as Unpaid Taxes since this was literally what it was. If I had this knowledge at the time of settling, I would have had them designate it as such in the settlement agreement so I could take advantage of the write off.

Thank you for your help. It is very much appreciated.