Thanks for the response to the questions:
- I agree with @Mike9241 in that there is limited information regarding the business.
- It does not appear, based on your reply, that there was not any capital contribution; possibly minimal?
- Based on the lack of capital, I believe the IRS would take the position that the entire $25,000 was a capital contribution, and as a result, would be a capital loss.
- As noted by @Mike9241 , LT vs ST capital loss would depend on the applicable dates; formation of the business and the end of the business.
- Could less than the $25,000 be considered capital?
- Yes. But given the limited facts, it is hard to say.
- Even if less is deemed capital upon audit, there are the other issues that would need to be considered; imputed interest and cancellation of debt at the corporate level (which is income), etc.
- Obtaining additional facts for this situation is not best served in a forum such as this.
- I would also recommend a discussion with a tax professional.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
