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New Member
posted Jun 4, 2019 7:02:07 PM

I need to attach a statement to a Schedule C giving the details for Loans made to a client that are now Business Bad Debt. How?

According to IRS Publication 550, for each bad debt consumers need to attach a statement to the return that includes: A description of the debt, including the amount, and the date it became due; The name of the debtor, and any business or family relationship between you and the debtor; showing that the borrower has declared bankruptcy, Business bad debts include loans to clients, suppliers or business loan guarantees. These are taken as business losses and reported on Schedule C

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2 Replies
Level 15
Jun 4, 2019 7:02:08 PM

Turbo Tax will not allow attachments ... so to do so you will need to mail in the return. 

Returning Member
Feb 19, 2021 12:37:45 PM

I incurred a loss in the sole proprietorship last year due to a loan that defaulted and the business declared bankruptcy.    Is the Bad Loan Loss amount reported as a negative income in Part I on Schedule C?   Do I report the total in one year or can I split is up in two or more years?