Small Claims court?

[LisasCraftiques]

What is the name of your state? North Carolina

If a commercial tenant fails to pay rent and has to go out of business while under a lease, does the landlord HAVE to take the tenant to small claims court in order for the landlord to report the loss of income on their taxes?

 

[FarmerJ]

It certainly would help give proof to show why there was a reduction in income from a property should the lower income amount be challenged /asked about in a tax audit when compared to other years.

 

[MIRAKALES]

The Internal Revenue Service (IRS) and State Department of Taxation and Finance have access to all business and personal tax records and all U.S. registered bank accounts. The loss of income and unreported expenses would be evident from both the commercial tenant’s reported financial records and the landlord’s reported financial records. (The proof would only become an issue if audited.) Filing a SCC for purposes other than collection of monies owed is frivolous… don’t you think?
Generally (individual tax situations vary), loss of business income is deducted from actual reported earned income. Therefore, if there was no reported earned income or rental income, there should be no rental income deductions or reported losses. This is a question better addresses by an accountant, however. The Business & Financial Forum may have better advice.