Robin Posted February 3, 2008 Report Share Posted February 3, 2008 My client forfeited $6,000 (personal funds) in the purchase of a warehouse that was to house his business. Would this be treated as a short term capital loss? Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 3, 2008 Report Share Posted February 3, 2008 I am not in the office but I believe it is an ordinary deduction. I will check in the morning if you don't get an answer. The character of the loss flows from the underlining asset not purchased, therefore, a loss on a warehouse not purchased but intended to be used in a trade or business would be an ordinary loss. Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 4, 2008 Report Share Posted February 4, 2008 See above. Quote Link to comment Share on other sites More sharing options...
bay Posted February 4, 2008 Report Share Posted February 4, 2008 My client forfeited $6,000 (personal funds) in the purchase of a warehouse that was to house his business. Would this be treated as a short term capital loss? It seems to me that first you have to make a distinction on whether this was a new start up business or whether it was a existing business that was searching for a warehouse. Quote Link to comment Share on other sites More sharing options...
Robin Posted February 5, 2008 Author Report Share Posted February 5, 2008 It was an existing business in which the owner was looking to purchase a warehouse to get rid of an excessive rent payment. Quote Link to comment Share on other sites More sharing options...
Robin Posted February 5, 2008 Author Report Share Posted February 5, 2008 See above. Thank you Roy. Quote Link to comment Share on other sites More sharing options...
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