Accounting question - Tax implications

[Street Pharmacist]

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?

[albertGQ]

All I know is if you're a street pharmacist, you shouldn't be claiming any of your income.

[Lego Man]

I think whatever bad debt is remaining (that isn't collectable) must be treated as a Captial Loss, meaning only half can be deductible agaisnt any taxable gains he may have had this year (or carried over into previous/future years).

I think.

[Mightyfire89]

Calling Mr Locke. Stat.

[Northendzone]

Are we talking about the no devils or the Phoenix coyotes here?

[Husky]

Without durther details sounds more like an ABIL.

[Locke]

Without more information, it doesnt sound as though it would be capital, ABIL is more likely.

[Street Pharmacist]

What information is needed and what is ABIL?

[Slava]

ABIL is the Allowable Business Investment Loss.

[Street Pharmacist]

Thanks everyone. That helps a lot