USA Offseting Deductions

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LLC1 is a US company that realizes a capital gain of $20k after the sale of personal property in the US. LLC1 makes a business/intercompany loan to LLC2 (a non-US company for tax purposes) for $5k in the same year.

1) Can LLC1 deduct the $5k loan (or business expense) from the $20k gain which results in being taxed on only $15k gain?

2) Are there any issues with LLC1 making a business loan to LLC2 - a non-US company? LLC1 and LLC2 are affiliate companies i.e. same owner.
 

BIG E

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1) No - loans are loans - not business expenses
2) No issues - but there should be documentation for both entities of the terms of the loans, purpose for which made and all other pertinent facts to document the transaction.
 
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Any suggestions on how to reduce the capita gains earned by a balancing deduction?
 

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