TP owned and worked in a small trucking company. Started in 2006 and terminated in 2008. Losses every year used up his stock basis of $50,000. Made loans to the corporation each year, thus still has positive loan basis of $18,000. Loans were properly documented and 1099-INT's issued in 2006 and 2007 but not in 2008 when business became insolvent (no money; $5.00 per gallon diesel fuel killed him). Drew a salary in 2006 and 2007, but not 2008. Had one employee; owner paid him all wages and paid all taxes due. Tractor & trailer were sold and bank account closed. Small net loss on the sale.
I am trying to figure out a way to charge off the loan balance in 2008. Don't think I can use a Section 1244 with no stock basis and bad debt write-off appears to be personal and not business. I've researched the issue, but even the Tax Book wasn't entirely clear.
Any ideas?
I am trying to figure out a way to charge off the loan balance in 2008. Don't think I can use a Section 1244 with no stock basis and bad debt write-off appears to be personal and not business. I've researched the issue, but even the Tax Book wasn't entirely clear.
Any ideas?