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    e interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against y

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    First, how not to go about it:

    A cash loan is not the way to go.

    Neither is signing as surety for a bank loan

    A gift of the amount required? Again, not the best approach

    But these are the three most common but wrong ways by which parents try to help their children get started in business.

    So what is the best way?

    For US residents and citizens, Internal Revenue Code 1244 provides the answer.

    If you give your daughter $50,000 say to start a new venture, and the business goes belly up with the loss of the $50,000, there is no way that the IRS will allow you to claim this loss as a deduction.

    Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against yo

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    But these are the three most common but wrong ways by which parents try to help their children get started in business.

    So what is the best way?

    For US residents and citizens, Internal Revenue Code 1244 provides the answer.

    If you give your daughter $50,000 say to start a new venture, and the business goes belly up with the loss of the $50,000, there is no way that the IRS will allow you to claim this loss as a deduction.

    Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against y

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    , Internal Revenue Code 1244 provides the answer.

    If you give your daughter $50,000 say to start a new venture, and the business goes belly up with the loss of the $50,000, there is no way that the IRS will allow you to claim this loss as a deduction.

    Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against y

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    Or suppose you loan her business $50,000. Again, if things do not work out, the business will keep paying you the interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against y

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    e interest until it runs out of cash, leaving you with a worthless note.

    Tax-wise, you have a capital loss, which is deductible at the pitiful rate of only $3,000 per year against your ordinary income. Or you can use the loss to offset capital gains.

    The same sad tax fate, a capital loss, results if you sign as surety and must pay Sue's $50,000 loan from the bank.

    Tax-wise, a gift to your daughter is even worse. The $50,000 is hers. As a result, the tax loss is hers, not yours. Under the circumstances, chances are that Sue has little or no income, and the loss is almost totally wasted.

    Note too that a loan or a bank surety is often questioned by the IRS. Why? The IRS contends that the $50,000 was a gift because you never intended to try to collect in the first place. You had no reasonable expectation of being repaid is the way the IRS puts it.

    But now let’s look at IRS Section 1244 – the right w

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