ripvanwinkle
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Joined: Jan 9, 2011 22:36:42 GMT -5
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Post by ripvanwinkle on Mar 24, 2015 20:59:57 GMT -5
Where do I put a unpaid bad debt? Theguy died and has no estate. $900
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billisonboard
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Post by billisonboard on Mar 24, 2015 23:33:38 GMT -5
I would recommend that you put it behind you and move on.
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rangerj
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Post by rangerj on Mar 25, 2015 16:31:06 GMT -5
If this is a nonbusiness bad debt, that is a debt that is not acquired in connection with an active trade or business, then it is deducted in the year it becomes totally worthless and it is treated as a short term capital loss regardless of how old the debt is.
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billisonboard
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Post by billisonboard on Mar 25, 2015 16:59:51 GMT -5
Wait a minute, if I give someone money and they don't pay me back, the rest of you have to cover it through me deducting it from my taxes?
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rangerj
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Post by rangerj on Mar 25, 2015 19:37:21 GMT -5
See Internal Revenue Code Section 166(d) and U.S.Treasury regulation section 1.166-5 in re. nonbusiness bad debts.
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TheOtherMe
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Post by TheOtherMe on Mar 25, 2015 20:32:38 GMT -5
Had it been reported as income?
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taxref
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Post by taxref on Mar 27, 2015 8:35:38 GMT -5
The answer given by Rangerj is correct.
A non-business bad debt is entered on Form 8949. A non-business bad debt(as opposed to a business bad debt, which is treated differently) does not have to first be included in income to be deductible.
Note that if the IRS questions the deduction, you will need to provide documentation. You will need proof that the debt exists (ie: a written loan agreement), and documentation of your efforts to collect the loan.
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TheOtherMe
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Post by TheOtherMe on Mar 27, 2015 20:13:33 GMT -5
OP has never stated if it's a non business bad debt or a business bad debt. That is why I asked if it had been included in income.
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ripvanwinkle
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Post by ripvanwinkle on Mar 28, 2015 16:14:06 GMT -5
This is a non business debt. I knew the man for 25+ yrs and he needed money to pay some bill. He was just separated from his wife.
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mwcpa
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Post by mwcpa on Mar 29, 2015 4:58:01 GMT -5
rip.... you, as was noted, will be required to show that you tried to collect the money, you should use all reasonable methods (legal ones), this may include an action in court. |
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ripvanwinkle
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Post by ripvanwinkle on Mar 30, 2015 21:31:25 GMT -5
Well it not going to kill me if I just pass on collecting. I don't have the time to do collections, court, days off from work etc. Thanks all.
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