Robin Posted February 3, 2008 Report 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
RoyDaleOne Posted February 3, 2008 Report 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
bay Posted February 4, 2008 Report 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
Robin Posted February 5, 2008 Author Report 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
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