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Can a partnership deduct expenses of a loan made by one partner to an outside business?
One partner invested in a business that went bankrupt in less than a year after the initial investment. The partner funded this investment through loans. Many of the creditors were involved and customers of the partnership. As a result, business and revenue for the partnership declined. If the other partners agree to pay off the loan with accumulated earnings can they deduct the loan as a business expense and will there be any tax implications for the partner?
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Home Business Success Kit
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