Expert: John Kirk, CPA Date: 8/7/2008 Subject: Real Estate Investment Loss
Question Several years ago, I and a group of others, as a group, loaned $750,000 to a development group in SC,with a repayment agreement that eventually would pay us 200% in interest. the developer have defaulted on the agreement and we have exhausted our efforts to collect from them. I personally have a total lost of $80,000 and others in the group have losses as high as several hundred thousand dollars. For al intents and purposes, this is a partnership, but we have never filed any tax returns as such. I know we can each write off our losses as individual capital losses and offset against capital gains with an additional $3000 per year, but is there a way to take the entire loss in one tax year by filing a partnership return and issuing K-1's to each partner? I do not expect any capital gains in the coming years and given my $80,000 loss, could use the write-off now, not over the next 27 yrs. Thanks for any help you can provide.
Answer Your loss is a capital loss, and as such is used to offset capital gains. Any loss not offset is deductible to a limit of $3,000 per year provided that the taxpayer has ordinary income in excess of $3,000.
I am afraid you are stuck with writing off $3 thousand per year, unless you have a large gain to offset.
