Has anyone had experience with deductability (or not) of capital contributions to a bankrupt business?
Brother A sold his home. He contributed $125,000 to Brother B's business, an LLC. Business began in 2005. Brother A had no contribution except for capital.
In a year and a half, Brother B was bankrupt.
There are no tax forms such as a K-1 or a 1065 for either 2005 or 2006.
IRS Practitioners Hotline, Tax Law, said this was deductible as a bad debt on a schedule D.
Any ideas?
Brother A sold his home. He contributed $125,000 to Brother B's business, an LLC. Business began in 2005. Brother A had no contribution except for capital.
In a year and a half, Brother B was bankrupt.
There are no tax forms such as a K-1 or a 1065 for either 2005 or 2006.
IRS Practitioners Hotline, Tax Law, said this was deductible as a bad debt on a schedule D.
Any ideas?
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