Question

Invested $20K in another guy's biz, and accumulated $30K credit cards/salary beginning in in Jan 2018. I left due to non-payment April 2019. What and when can I deduct?

Forum|Forum|6 years ago
April 15, 2020
1 reply
0 views

Do I post either of them as a loss against earnings? I have not decided to sue yet.

TurboTax Online

Employee

It could be a capital loss in an investment if you have proper documentation that you invested and it was not a loan in disguise. It has be be invested in anticipation of making a profit. How were you to collect the profit? Unless you have a contract, or other signed agreement of exactally what and how and when you were to receive a profit from the investment the IRS will probably disallow any loss.

What do you mean "non-payment"? And salary? - were you an employee or partner that did not get paid - that does not sound like an investment - it sounds more like a buy-in or loan to a partnership.

You probably should discuss this with an attorney since it appears to be a legal problem.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

O

olsenbriAuthor

I have bank statements that show he was given the money, I will have to look at my paperwork for the conditions of the loan. I do have all of the receipts for my personal credit card used for his business (yes, I know this is not good accounting practice, one of the reasons I left). Where would I report the credit card expenses?

macuser_22

Employee

@olsenbri wrote:

...my paperwork for the conditions of the loan.

That makes a difference. Unless you have a business and file a Schedule C, and it was your business that made the loan to another business (for business purposes) which "might" make it a business bad debt, then it cannot be deducted.

The TCJA (Tax Cuts and Jobs Act) eliminated the personal bad debt deduction for tax years 2018-2025.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**