Accounts Payable Rules for Liquidation

How does one handle outstanding account payable when the business is closing and on an accural basis, but owner has no way to pay the debt, can these expenses be deducted on the final tax return?

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bwstui

  • Jul 19th, 2010
 

No, the expenses are dissallowed.  If you have already expensed payables that will never get paid, you must reverse them when you liquidate....this means you must recognize INCOME.

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