ILLMAS Posted August 14, 2015 Report Share Posted August 14, 2015 TP closed his used car dealer due to lack of sales, part of the inventory was sold for scrap metal and another portion was given up as as loan repayment to a family member. Truthfully nothing is in writing as in regards to the loans, TP was happy to close the business and pass the remaining inventory to a family member. The loans do appear on the books, but the loan balance is greater then the cars given up, currently the loans are $150K and estimated value of the cars is $40K. Family member is going to lose close to $110K, which he loan from his construction business. This sounds like a bad soap opera, but it is what it is. TP family construction business is now out of $110K, it's a long shot, but can the construction company who made the loans directly to the car dealer take a loss on the uncollected loan? Thanks MAS Quote Link to comment Share on other sites More sharing options...
rfassett Posted August 17, 2015 Report Share Posted August 17, 2015 I would suggest reducing the loans to writing before contemplating any further strategy. Without that, you are wasting your time. The construction company may have an investment loss. But, to me, the more important issue may be the debt forgiveness income that the car dealer will be taxed on. Since it is a family member you also have related party issues. Did I mention how important it is to get the loans reduced to writing? 1 Quote Link to comment Share on other sites More sharing options...
imjulier Posted August 18, 2015 Report Share Posted August 18, 2015 I think they are trying to fabricate a loss. Purchased inventory for $150K but it is worth $40K. Sounds fishy to me. Follow rfasset's advice and make them document the loans. 1 Quote Link to comment Share on other sites More sharing options...
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