Facts: TP is a U.S. Citizen with some U.S. Income. He has a business in Italy (which if he ran in the U.S. would be a Sch. C with a net loss of 20k). He loses 20k in the business in Italy. Is there any reason he would not be able to deduct the loss on his U.S. return?
2006-12-20 00:26:56 · 3 answers · asked by woodluvto 2 in Business & Finance ➔ Taxes ➔ United States
If you are truly active in the business you can take the losses you are at risk for. I.E. it was your money or you are obligated to pay the loan for the money used to create the loss. Active generally means you have worked 750 hours or more per year in the business. If you are not at risk the loss is suspended until you become at risk.
If you are not active in the business then the passive loss rules apply and the loss would not be currently deductible unless you have other passive income to write it off against or when the business terminates.
2006-12-20 02:56:34 · answer #1 · answered by waggy_33 6 · 0⤊ 0⤋
If the business is not incorporated, he should still file a Schedule C and report the loss. The loss must be tracked and may have future implications in the event the business is disposed of or a foreign tax credit is claimed, which are too complex to discuss here.
2006-12-20 15:45:24 · answer #2 · answered by TaxGuru 4 · 0⤊ 0⤋
thank you for the information
2006-12-20 08:31:07 · answer #3 · answered by mariefel q 3 · 0⤊ 1⤋