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How do you figure out the small business loss:

Expert: John R Mott

Kelvin asked:

I voluntarily dissolved my company last year. There were two shareholders in the company and our shares were half and half. The last balance sheet read: -Due to shareholder 1 (myself): $13000 -Due to shareholder 2: $17000 -Retained earning : -$30000 -no asset The loan given to the Corp is my total investment in the Corp. I wonder how much the small business loss is when I prepare for my personal tax return.

John R Mott answered:

Your uncollectible shareholder loan may qualify as an allowable business investment loss (ABIL). The ABIL would be one-half of your loss. If you are shareholder 1, then your ABIL is $6,500. The key feature of an ABIL is that it may be deducted against income from any source. You might want to verify that you satisfy the other requirements for an ABIL. Visit the CRA ( web site and search on the phrase.

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at:

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