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Bad debt from C Corp. Dissolution

  • 1.  Bad debt from C Corp. Dissolution

    Posted 08-28-2019 03:21 PM
    Hi everyone.

    Have a C Corp. client who closed his business in 2018.  No real assets to sell, but the sole shareholder has lent the company money in the past few years to keep it going, in excess of $100,000.     Tax return has not yet been filed.

    In the past the uncollectible loan would seem to have gone on Sch A, as  2% business expense, but that is now gone.  Can this loss be taken on the front of the 1040 as Misc. Income (loss) ?  Or is it a total loss to the shareholder?

    Otherwise could i possibly reclassify the loans as Additional Paid in Capital and take a capital loss on the 1040?

    Thanks for your thoughts!

    Michael Katz, CPA
    1055 Stewart Avenue #20
    Bethpage, NY 11714

    tel  516-605-1900

    fax  516-605-1899