bad debt and K-1

[FullMoon]

A partner in S-1120 owned other business as well and borrowed money from this S-1120. His business failed. The S-1120 wants to file for bad debt. How does it affect the partner's K-1. What line does that bad debt show up in

[spanel]

Bad debt is a tough one... reason your not getting any responses is you left out WAY TO MANY details. Let start with the following and see if anyone wants to help...

Check written to shareholder or business?
What kind of business, 1120,1120S, 1065, sole prop?
Was there loan paperwork?
Was any payment made back?
Did they file any paper work with anyone trying to collect? Courts?
Is this 1120s in the business of giving loans?
How much debt are we talking about?

This would be a good start....

Chris

[FullMoon]

the amount was loaned to the partners business with no paperwork.
this is a 1120S two partners
some payments were made back
no collections papers were filed. that partner's business went bankrupt
no this 1120S is not in the business of giving loans
$9,000

Thanks Chris,

Marge

[spanel]

the amount was loaned to the partners business with no paperwork.
this is a 1120S two partners
some payments were made back
no collections papers were filed. that partner's business went bankrupt
no this 1120S is not in the business of giving loans
$9,000

Thanks Chris,

Marge

No loan paperwork, no legal collections attempted? Was the loan in the bankruptcy that was filed?

I'm leaning towards note receivable shareholder, not bad debt.

Chris

[FullMoon]

there is no receivable since that receivable claimed bankruptcy

[spanel]

We are not talking a huge sum of money, however the lack of paperwork for the loan is very concerning. Usually, no loan paperwork, no collection attempts all equal no deduction.

I would set it up as a N/P shareholder if it was my client.

Chris