1099 contractor or regular employee

[Fulthrotl]

Notice that Fulthrotl used the term "disallowed". As I hazily recall, these sorts of things were set up so the general partner (con men) got the cash and the limited partners (suckers) got the deductions. When they disallow the deductions, you own a piece of the revenues even if you didn't get one red cent.

yep. you have it.

her ex put in $5k. he wrote off $40k one year, and $30k
another year, iirc.

they disallowed the $70k, assessed the tax on $70k,
doubled it, as the penalty is the same as the tax avoided,
and charged 28% interest on both of them, compounded
semi hourly, it seems.

by the time she chapter 7'd on the entire thing, the interest
was running above $20k a month. she had to BK on everything,
including the general partners, in hurliberg, switzerland. the ex,
the IRS, the lady who sold her donuts on the way home from her
exercise class. the whole planet was included in the BK.

if you want to know what screwed up is, have your spouse do
that, and you DON'T file a BK. you get drug thru the bk, your
credit profile looks like you filed a BK, but you still owe all your
bills.

wasn't much fun.