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Deductions & credits
If you personally loaned money to a business that is uncollectible, it would be a personal bad debt (unless you were in the business of loaning money).
However, a debt is closely related to your trade or business if your primary motive for incurring the debt is business related.
Click this link for more discussion on Business Bad Debt.
This IRS link also provides guidance on Bad Debt Deduction.
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‎January 14, 2021
4:17 PM