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I am sending you this IRS link that specifically addresses bad debt deductions. It does not specifically mention a time limit but this is what they state in the link, "A debt becomes worthless when the surrounding facts and circumstances indicate there's no reasonable expectation that the debt will be repaid. To show that a debt is worthless, you must establish that you've taken reasonable steps to collect the debt." So if you decide to report it this year. Here is how i would suggest to report it:

1. Go to federal>income and expenses>investment income>Stocks, Mutual Funds, Bonds, Other (1099B)
2. First question asked, who brokered the deal, leave this blank
3. Then it will ask what kind of investment did you sell, indicate other
4. How did you receive it, indicate something else
5. Now it will ask for the description,  enter the name of the debtor and “bad debt statement attached
6. it will ask the date the agreement was made
7. next it will ask the date that you disposed of the bad debt (the date you stated that it became worthless)
8. For proceeds, indicate "0" For basis, put in the amount of the original loan amount
9. Now you will have a 8949 listing this in your return as a loss.  You can only be able to deduct $3000 as a capital loss so if your loss is more than that, you will be able to carryover that capital loss in future years until you recoup the full amount of the loss.

Now here is the kicker. For each bad debt, attach a statement to your return that contains:

• 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,
• The efforts you made to collect the debt, and
• Why you decided the debt was worthless. For example, you could show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt."

This means that you need to print and mail your return this year, attaching a written statement that references the information required above. i hope this is thorough enough.