A loan issue by a taxpayer is not the same as claiming a bad debt for anticipated income.
It is assumed that if you use your own money to provide a loan to someone or some entity, that it was at some point taxable income to you over the years. You should have a debt instrument (a note or repayment obligation statement) showing proof of the contract and have taken all steps to try to collect.
This is not the same as money you expected to receive but never did and as such never reported it as taxable income.
- Examples: Rental income when the tenant didn't pay their rent (all expenses for maintaining the rental unit were expensed). OR farm crop income from crops destroyed by natural events such as flooding or draught (all the expense for the seed, planting, fertilizer, equipment has already been expensed).
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