Tax Question
 

So a previous company I was contracting for decided to file bankruptcy after owing me $10k+, and same with other developers.

I know this is an accountant question, but I'm wondering if anyone in here has dealt with this and knows if it can be written off as a loss or something.

Input?

'Tax'???

What is this 'Tax' that you speak of???

Yes, it can be written off as a loss, however, I believe there is a limit as to how much you can declare per year. It used to be 8k.

So you could write off 8k this year and 2k next.

You should probably confirm that the amount has not changed.

Wrong again dumb Ass

You need to go to their bankruptcy hearing and file a claim against them and they will be ordered to pay you a percentage of the debt.

Fantastic, I will research this. Thanks :)

That would require me to find out WHEN it is, take time off work and fly to another state. He has no income to pay. He liquidated the software to another company and used the money to pay for taxes BEFORE he said he was filing for bankruptcy.

So, he gets $2.00 out of $10k. Are you suggesting he can't write off the $9,998 as a loss?

Not true, if this company actually indeed filed for bankruptcy you should then receive legal papers in the mail. All clients from a company shall receive the papers so they can go to the hearing and tell the court how much they will settle for.:winkwink:
Also you can send in the papers without going to court, you should eventually receive something from the lawyer.

That's assuming he is doing things correctly, right? I mean .. I was just a contractor writing web apps for him, for his clients.

You are shit out of luck, you didn't actually lose any $$, you just lost time... and you can't deduct lost time... :2 cents:

I'm not suggesting that at all, but he needs to settle first. Then he maybe able to write off the difference.

I wasn't quite sure. Logically, one would think that as a contractor, time is money, thus if I didn't get $10k for my work, that is $10k I could have received from another client.

That's correct! If he did not file bankruptcy and just shut down then your screwed:helpme

It depends, I have been through this before and I have been on both sides.

If he legally filed bankruptcy and has you listed as a client you should get notified.:)

According to the IRS, "You can claim a bad debt deduction only if the amount owed to you was previously included in gross income. This applies to amounts owed to you from all sources of taxable income, including sales, services, rents, and interest."

http://www.irs.gov/publications/p535/ch10.html

You should call a few tax accountants / CPA's and tell them your situation. Use the one that gives you the best advice.

Everyone has their own stories and thoughts. Contacting a Taxman,,well, Gheeze, Hum, err, ah,.........Do you think:winkwink:

Some use that same argument as why they do not need to pay taxes at all. You are trading your time for money so there is no profit. Many people have actually won their court cases with that argument. I wouldnt try it though lol