My family member who lives outside of the USA loaned me personally $200,000 for a business I opened, I have been paying interest to him for three years.The business closed this year, ,I have three questions
1)Can I take the loss from the business that closed as a Capital Loss on my tax return ??? it is over a year .
2)D o you have to take the Capital loss the same year as the loss ???
3)Can my family member who loaned me the money call it a forgiveness of debt and I take as a gift ??? note he does not do a US tax return so he cannot advise the IRS a gift to me, if a gift is possible how do I inform the IRS or do I need too???

Thanks

David GEE

“1)Can I take the loss from the business that closed as a Capital Loss on my tax return ???” it is over a year .”---->Of course; For purposes of the NOL worksheet, would the loss from the 4797 be carried on line 11 of the NOL worksheet that asks for "business capital losses.
“2)D o you have to take the Capital loss the same year as the loss ???”------> what you have to do is subtract this capital loss from any capital gains you made this year and if you still have a loss (net capital loss). The loss can be used to offset other capital gains. If your capital losses exceed your capital gains in the tax year of the corporate dissolution, your net capital loss deduction is limited to $3,000. The remaining capital losses are carried forward until used up by capital gains or continued use of the $3,000 deduction.
“3)Can my family member who loaned me the money call it a forgiveness of debt and I take as a gift ??? “---->It is a gift for you; as a recipient of yr gift , you are NOT subject to the gift tax in US.
“note he does not do a US tax return so he cannot advise the IRS a gift to me, if a gift is possible how do I inform the IRS or do I need too???”p[--->As the amount of the gift exceeds $100K, you need to file IRS Form 3520 with the IRS.