astanleycpa

All of you came up with the same answer that I did - no basis, then no deduction. Client insists there is a way to do it and other franchisers did it. I've asked for details and rec'd none of course. Thought I might be missing a 'special' situation deduction. Thanks for confirming what I was thought was the answer !

Client abandoned 15yr franchise service business (as a sole prop), then started over as an S-Corp on his own. He lost customer files, phone #s, goodwill and advertising, but all the equipment was his to keep. He had finished paying the initial franchise fees and franchisor wanted to charge him extreme amount to renew the franchise. He wants to take large $ deduction for lost value of abandoning the franchise structure. Can this be done and if so, what is best way to do ?