Ronald Dickinson’s story stands as a lesson for all business owners.
If you lend money to your employees, you need to protect yourself with the right documents. In the event your employee does not repay you, you want to ensure that you get a tax deduction for the bad debt.
Mr. Dickinson did not protect himself, and unfortunately the IRS showed no mercy. It denied his bad-debt deduction, and so did the tax court when Mr. Dickinson took his case to trial.
But you can learn from Mr. Dickinson’s mistakes. With the right tax planning, you can lend money to employees and protect yourself with the ... Log in to view full article.