Incarceration is not the same as being insolvent. Insolvency would have to be the reason to be able to utilize the nonbusiness bad debt. If you discover this is the case from the contractor then you could use that action on your tax return. You must have sufficient records to prove your case. Examples would be proof of a bankruptcy by the contractor or other proof the contractor might have for insolvency.
As our awesome Tax Expert @JohnW222 indicated a casualty loss is what has taken place and there is no deduction (suspended) at this time when a trade or business is not involved as is you situation.
@kknox7975
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