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Street Pharmacist · 05-18-2012, 08:43 PM

My father and I are discussing a business deal gone bad and have a tax question I thought the CP brainteaser could answer.

He sold a business with assets to someone and financed it himself 100%. The deal was to finance the majority over 5 years and upon the end of the term, the borrower would have sufficient equity to finance the rest through a bank.

Now the 5 years have passed for some time and with a new agreement just monthly installments were being paid. Now the borrower is months in arrears and a question arises:

If the remaining amount were written down as bad debt, would that be a tax deductible loss?

05-18-2012, 08:43 PM	#1
Street Pharmacist Franchise Player Join Date: Nov 2006 Location: Salmon with Arms Exp:	Accounting question - Tax implications My father and I are discussing a business deal gone bad and have a tax question I thought the CP brainteaser could answer. He sold a business with assets to someone and financed it himself 100%. The deal was to finance the majority over 5 years and upon the end of the term, the borrower would have sufficient equity to finance the rest through a bank. Now the 5 years have passed for some time and with a new agreement just monthly installments were being paid. Now the borrower is months in arrears and a question arises: If the remaining amount were written down as bad debt, would that be a tax deductible loss?