Sch C filer has client who did not pay his..

[AZ-Tax]

bill of $65,000. I did a similiar one last year except the taxpayer was a self employed health ins agent and the money the taxpayer/agent lost had to do with a loan the taxpayer/agent made to an inventor that went bad. That taxpayer/agent ended up reporting this loss on Sch D but I would think this would be different since the $65K is related directly to the taxpayers business. So would this appear on Sch C part 5?

[S T]

Isn't

your taxpayer Schedule C filer on the cash basis?

Sandy

[AZ-Tax]

Yes, taxpayer Sch C filer on "cash basis"

Yes, taxpayer Sch C filer on "cash basis"

[joanmcq]

So if the income wasn't reported, no loss. Basic accounting.

[thomtax]

So if the income wasn't reported, no loss. Basic accounting.

Agree with Joan. Since it was never put on as income, there is nothing to deduct against. The expenses incurred earning the money will be expensed in the normal handling of expenses for the company.

LT

[erchess]

Look at it this way AZ

If he could claim a deduction for income not received, what would stop you from claiming a deduction for 100K tax returns at your average price each that you didn't do? Ok ya got me my example is even more farfetched than yours but not much more.

[AZ-Tax]

Thanks, one should never

ask a question on this board unless they spent at least 5 mins thinking about it and not having their kids bothering you on "whats for dinner" : )

How do you get those smilly face icons to appear in the message?

Thanks

[erchess]

You spaced out

You have a space between the colon and the paren which is why you got the two of them instead of a smiley.

By the way, what are you going to make for me for dinner?

[Jesse]

I'm making meatloaf, mashed potatoes and green beans.

[FEDUKE404]

Smiling

How do you get those smilly face icons to appear in the message?

Thanks

Look at the bottom left of the screen for "Posting Rules" then "Smilies"

FE

[Burke]

Well, this is certainly a timely question. Info on current weekly Tax Pro e-mail from NATP discusses this situation at length, not about deducting loss, but about issuing the debtor Form 1099-C, Cancellation of Debt. There are rules and regs, but it can be done by a tax preparation business if proper procedures are followed. There is poetic justice after all.