Can I claim a non-paid loan by me to another after he declared bankruptcy and I was awarded nothing?

[topcat3105]

Amount was for $24,000.  No repayments made. Bankruptcy judge did not award me any relief and precluded me from filing a lawsuit for monies loaned.  Is there some way to claim this loss of funds on my tax return, either in this year or several years?  Big loss for me as a retiree.  Help???

[MargaretL · Accepted solution]

Yes, you can claim the lost money as a non business debt. A nonbusiness bad debt is reported as a short term capital loss, subject to the $3,000 limit per year, the remaining amount is carried to the future years for you.  Here's a data entry:

1. Federal Taxes
2. Wages & Income
3. Investment Income
4. Stocks, Mutual Funds, Bonds, Other - indicate that you have not received 1099-B from financial institution and select "Uncollectible Debt (Nonbusiness Bad Debt)" as the type of investment, follow the prompts

Note: You will have to upgrade to Turbo Tax Premier to report this...