Matthew W. Lucas

Attorney at Law
 

703.821.5522

e-mail: mlucas@cs.net
     
 

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Bad Loan or Bad Investment?
  The sole shareholder of a small business advanced a large sum of money to the corporation When the company became insolvent, he claimed a business bad-debt deduction. The IRS and a federal district court denied the deduction for three reasons:
  •  The note contained no payment schedule or maturity date.
  •  The corporation was unable to obtain a bank loan.
  •  The corporation provided no collateral for the loan. 

Such arrangements must be documented to prove a true borrower-lender relationship existed between you and your corporation.

 
     
     
     
     
     
 
       
         
   
 
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