I make monthly payments for purchase of a business that I have started. How do I claim this payment? its a contract with no interest on it and person to person, no banks.

I purchased my business from another person for the amount of $10,000 we have made a contract so that I make monthly payments of $500 a month to him until paid off. There is no interested with payments unless payment is made late. So its like a personal loan but without no banks, but person to person. How do I claim this on my taxes?

778

Expert Alumni

Jun 4, 2019 2:23:59 PM

The amount you paid for the business is capital that you invest in the business and is not a business expense.

You cannot claim the amount of loan or the payments you made on the loan. If your business is reported on Schedule C, then the loan or its repayment are not entered on Schedule C.

You could claim depreciation on any tangible assets you bought with the business. If the sale price of the business includes goodwill, then you can amortize the goodwill over 15 years.

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I make monthly payments for purchase of a business that I have started. How do I claim this payment? its a contract with no interest on it and person to person, no banks.