Many thanks for your detailed responses.
My daughter's main LLC business is the rental of an apartment unit. She took $20,000 in funds from this LLC to set up a retailing entity as another LLC, which is the LLC that has been shut down. There is not a formal loan contract. The apartment-related LLC received $12,000 from the retail LLC in payment for the loan before it went out of business. The retail LLC defaulted on the $10,000 remainder.
Since this was a business transaction, it would seem that the loss on the loan would be equivalent to a business expense. If she can document the use of the loan money coming from the apartment LLC for the purchase of retail goods for the retail LLC, would that not qualify indirectly as a loan?
Sorry for such a messy situation!
