Many people have experienced the pain of an investment gone wrong. You put money into a business, loan funds to a friend, or participate in a real estate venture, expecting strong returns. But instead of profits, you end up suffering losses when the deal unravels. It leaves you wondering – can I at least deduct……
Tag: Tax Loss
Crypto Tax Loss & the Tax Loss Deduction Rules
Crypto tax loss refers to the capital losses incurred from selling or trading cryptocurrencies at a lower price than what was paid for them. These losses can be used to offset any gains earned throughout the year, reducing the taxpayer’s overall tax bill. The tax laws are clear that this type of investment loss is……
An Appraisal is Not Always Needed for a Casualty Loss Deduction
Casualty losses are often challenged by the IRS, as they meet the “large, unusual, or questionable” (“LUQ”) standard for pulling returns for audit. On audit, the IRS insists on an appraisal from a third party that shows the difference in fair market value before and after the casualty event. Even if an appraisal is provided……
Tax Implications of Debt vs. Equity in Related Entities
Investors who engage in successful ventures often also invest in less successful ones. In some cases, one venture ends up funding another. When a taxpayer operates through multiple legal entities, this can lead to numerous complexities. For example, “due to” and “due from” intercompany transactions raise questions, even if they do not involve international transfers.……
Tax Consequences of a Loan vs. Capital Contribution
Taxpayers often structure their affairs to their advantage. Our legal system and even our tax laws allow for this. With many transactions, one way this is done is structuring transfers as either loans or capital contributions. The tax ramifications for the transfers can vary widely based on this type of broad classification. This distinction is……
Using an Old NOL Carryforward
The things we take for granted these days. If you are younger than me, you may not realize it but there was a significant change that happened in the 1990s. Personal computers were just starting to actually be useful in the workplace. The ability to type and use a 10-day calculator were sought after job……
Hobby Loss vs. Start-Up Expense?
Just about every business starts out with losses. This is the nature of start-ups. The activity will either gain traction and produce income and possibly a profit or, eventually, the activity end. This is basic economics and capitalism at work. The U.S. economy is based on these concepts, allowing would-be entrepreneurs the opportunity and motive……