- quote -

The point is moot to the lessor if the rent is not
collected. No write off for uncollected sums (Unless you
accrued the rents never collected.)

HOWEVER: Under some circumstances the forgiveness of rent
(debt) to an otherwise solvent subtenant might be taxable
income to the subtenant especially if it as pass thru
entity. Double check before you all decide how to treat
this nonpayment. You may want some leverage if some other
steps are needed such as to get them out, whatever. Don't
give away leverage prematurely.

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Vlad Selsky <kidonajourney2[at]hotmail.com> wrote:

- quote -

Generally it can write off only the amount that it reported
(or reports) as income.

After all, if you agree to rent my pen for $1 million, and
since you can't pay we agree to write off the debt, how much
of a tax deduction should I get as a result?

(The amount paid as rent is deductible, but that's not
write-off.)

Seth

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Vlad Selsky wrote:

- quote -

Not if the rent was not reported as income. You cannot
exclude what you don't have or get.

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I am one of the founders of an LLC who is a tenant that is
subleasing the commercial property.

The subtenant is unable to make all of its rent (nor has the
means to do so for the duration of the lease).

The LLC is willing to excuse the defaulted rent. Can it
simply write off the defaulted rent as a business loss? Is
there a limit it can write off?

And is there any tax benefit or merit to converting the
defaulted rent to a promissory note that gets written off?
(In other words, is it easier to account for a default on a
loan versus default on rent?)

Thanks, Vlad

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