Capital Loss - Spidell

Capital Loss

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Message Board Capital Loss

This topic contains 4 replies, has 3 voices, and was last updated by Anonymous 2 weeks, 5 days ago.

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  • #182809
    Anonymous

    Client dissolved his solely-owned C Corp, in which his stock basis was $1,000. Upon dissolution, the corp was left owing him $22,000. Is the capital loss on his personal tax return $1,000 or $23,000?

  • #182810
    Library Library
    Participant

    It’s quite possible that at least the 1K stock loss qualifies as an ordinary loss under IRC Section 1244.  It’s likely that the 22K debt loss remains as a capital loss.

  • #182856
    William Dewberry
    Participant

    Non business bad debt ST capital loss $ 22,000; Option is business bad debt which is ordinary loss, tough one to prove though.

  • #182857
    Library Library
    Participant

    For a business bad debt, there are other steps to take in order to prove collection efforts and the timing when the debt became uncollectible.  I wouldn’t think this is a viable alternative for a shareholder loan to their 1oo% owned corporation.

     

     

  • #183551
    Anonymous

    Thank you!