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@Avs19 wrote:

I'm thinking the bar will go under this year so any 2022 and 2023 losses will be completely lost by the son.

Can they amend the agreement to state that all losses will flow to the dad? Does this meed the definition of substantial economic effect?

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I would first back up a bit.  If the bar goes out of business, will there be assets?  I they put $150,000 into the bar, there may be assets that will be sold, creating Basis for the son to deduct losses.

Amending an agreement might be more of a lawyer situation.  And I suspect you first need to figure out what was the original understanding/agreement?  I wouldn't think you can amend things just because you realized after-the-fact that it isn't an ideal setup.