This might be a nonbusiness bad debt. Hope you have paperwork to support the loans if you write it off and are audited. Also, if these loans may have required you to recognize interest income each year even if not paid. IRC section 7872
non-business bad debt is:
1) is a legal obligation (what does state law say) for a fixed amount of money to be repaid
2) is totally worthless (have you made attempts to collect some or all - if not the iRS could deny any deduction
a NBBD is treated as a short-term capital loss. There must be proof that the debt had value at the beginning of the year and no value at the end of the year
statement required per reg 1.166-1(b)(1)
1) describe the debt. amount and due date
2) Debtor's name and your relationship to the debtor
3) description of efforts made to collect the debt; and
4) an explanation as to why the debt is worthless.
see IRSPUB 550
