My wife has a personal loan of $50,000 that was defaulted on. The loan was to a business associate of her former husband. Can we clam this as a loss?

Yes, you can report bad debt loss on Form 8949.  See instructions below. This type of bad debt is considered a "Non-business Bad Debt". Make sure the debt is legally and formally established and that you've taken reasonable steps to collect the debt and show that at the time of the transaction it was not a gift. (ref. IRS Tax Topic 453: https://www.irs.gov/taxtopics/tc453).

Form 8949 carries to Schedule D as a short term loss, so make sure you are  using Turbo Tax Premier version. Note that Schedule D losses are limited to $3,000 a year. If you have any capital gains though, you can use it against those.. Any remaining loss will carryover to the next year.

To enter your loss in Turbo Tax Online Premier:

1. Click on Federal Taxes
2. Click on Wages and Income
3. Click on I'll choose what I work on
4. Click on Investment Income
5. Click on the start button to the right of Stocks, Mutual Funds, Bonds, Other
6. Answer Yes to the question on the next page "Did you sell any investments in 2017?"
7. Answer No to the question on the next page "Did you get a 1099-B or a brokerage statement for these sales?"
8. Click on Uncollectible Debt (Nonbusiness bad debt) under "Choose the type of investment you sold".
9. Enter your information about the Bad Debt here and click continue through the next screens.