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Old 03-02-2015, 09:50 PM
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Non-Business Bad Debt Relationship Question

The sole shareholder of ABC Corp (a WY C-Corp), was John Doe Family Trust. John Doe, an officer of the corporation, made a personal loan (promissory note) to ABC Corp and has been paying taxes on the interest received from the loan. (The corporation had no employees.)

The business has now failed/dissolved, and John Doe wants to file a short-term capital loss on his personal taxes for the unpaid promissory note, as a non-business bad debt.

Since John Doe is the trustee for the John Doe Family Trust, is it considered to be a shareholder loan (for tax purposes), or is it considered to be a loan from an officer? Is there any difference in the eyes of the IRS?



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