Legal Question in Tax Law in Illinois

Is non repayment of loan income?

1) A loans B $xx from A's business.

2) B signed contract to repay A.

3) B does not repay A $xx.

4) A sues B for $xx and wins.

5) Can A deduct it as bad debt?

6) Is that $xx considered income to B?

7) And therefore B pay income taxes on $xx?


Asked on 8/29/09, 1:58 pm

1 Answer from Attorneys
Joseph Michelotti Michelotti & Associates, Ltd.

5 yes

6 no

8 depends on whether a 1099 goes from a to b

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Answered on 9/05/09, 3:59 pm


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