I have a friend who has his own company. There are 3 partners in the company. It is a S corp LLC. They had contract with the other company to do some job for 1year. But they quit before 1 year and did not complete the job. The other company sued them. As a settlement they had to pay $70000.00. My friend resigned and he is no longer a partner of that company. He paid $16000.00 in settement in 2008 as per the agreement between the partners. Since he is no longer a partner he is not going to get K-1 for the loss of the company in 2008.

Is there any way he can claim this $16000.00 on his 2008 personal taxes.

Please let me know.

Thanks,
MV

MV:

Even though he resigned prior to the end of 2007, he IS entitled to a K-1 to document the money he paid as part of the settlement. He just needs to make sure the company know that.