USA Tax Question


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Sep 3, 2019
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Hi,

My wife and I had an S Corporation here in the USA. When we established the business, about seven years ago, we loaned the business $100,000 plus we seeded the business with several internet (website) businesses.

Last year, we shut the business down. We never received any of the cash back, but we retook ownership of a few of the remaining websites. We are selling one of the websites for $20,000. (Let's call it XYZ.com)

How is the $20,000 gain from the sale of XYZ.com treated? We created XYZ.com from scratch. We expensed all of the costs through the business during the time we owned the business. Given that, I am assuming that the basis for XYZ.com is zero.

If that's the case, I assume that I have a capital gain of $20,000.

We took two distributions of $10,000 each over the years, other than that, we never took any money out of the company. Since the $100,000 note was never repaid, (a) can I use that $100,000 as a loss to offset the entire $20,000 gain? (b) how do I record the $100,000 loss on my personal return?

Thanks in advance for your reply.

David
 
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