Discussion:Business Interest After Business Is Dissolved

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Discussion Forum Index --> Basic Tax Questions --> Business Interest After Business Is Dissolved


Discussion Forum Index --> Tax Questions --> Business Interest After Business Is Dissolved

Crystalnoon (talk|edits) said:

28 March 2011
I have a client that took out a loan for his business. The business no longer generates income but the loan expense is still there. Is it okay to still take a deduction for this loan interest? If so, should it still be taken on the sch. C? And how long can they continue to take this deduction? Thanks!

Crystalnoon (talk|edits) said:

29 March 2011
Hmmm. . .

Bobcraig (talk|edits) said:

31 March 2011
If the loan was for legitimate business expenses, it is traceable to the business and deducted on Schedule C until the loan is paid off. If the business was sold and cash taken, I believe that the loan should be paid off with the cash and, if not, the loan could be considered personal interest.

Solomon (talk|edits) said:

31 March 2011
Settled some time ago - from Rev. Ruling 67-12:

"The fact that the business has been discontinued does not prevent the deduction of expenses otherwise allowable to an individual taxpayer using the cash receipts and disbursements method of accounting.

See Waters F. Burrows v. Commissioner , 38 B.T.A. 236 (1938), acquiescence, C.B. 1938-2, 5. Also, compare I.T. 4071, C.B."

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