cpawr Posted February 14, 2020 Report Share Posted February 14, 2020 LLC member made true loan to the LLC with amortization schedule requiring monthly interest and principal payments from LLC to the loaning member. After about a year of payments being made, the business went bad and the LLC was unable to make any more payments to the loaning member. The business will basically be shut down without any cash flow for the loan or any other distributions. I’m not sure how to handle the bad debt the loaning member has incurred with the remaining loan balance. Would it be a business or non-business bad debt on their personal return? Also on the LLC tax return would debt forgiveness come in to play with income being recorded. many guidance would be appreciated. Quote Link to comment Share on other sites More sharing options...
Terry D EA Posted February 16, 2020 Report Share Posted February 16, 2020 The loaning member can claim a short term capital loss on form 8949 for the unpaid balance of the loan. This would also be classified as a bad business debt. Check out the link below for further help. https://www.irs.gov/taxtopics/tc453 Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.