Our business is structured as a partnership with four Partners. One of the Partners died and never paid back a loan. Can we deduct this as a loss on our partnership tax return? We were not formed as a LLP.
There are likely many partnership tax issues in your question. The answer however depends on whether the loan (if respected as a loan) is actually worthless. If it is, then you may be able to take a loss. The next question would be what is the character of the loss, capital or ordinary. What happened to the partner's interest? Is the Estate the new partner?Reply 330 weeks ago