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A company asks whether it can deduct the non-payment of a loan granted to a related party as an expense via a legal claim or seizure. The DGT rules that, because they are related parties, it is mandatory for the debtor to be in insolvency proceedings and for the judge to have opened the liquidation phase.
Companies cannot rely solely on legal proceedings to claim tax deductions for bad debts involving related entities; strict insolvency criteria must be met.
The tax team reviews your specific situation.
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