Hired a contractor to complete work at my personal house, and long story short, the contractor filed bankruptcy which left me out a sum of money for the uncompleted work. In doing some research, it appears I may be able to deduct this loss as nonbusiness bad debt via Form 8949. The bankruptcy was just recently closed out in February 2025. A few questions:
1. Am I correct in that I can deduct as nonbusiness bad debt?
2. Do I take the bad debt deduction in my 2024 return (current filing) or next years (2025), since the debt became officially worthless in 2025?
3. Am I limited to the $3000 capital loss deduction per year? And if so, do I deduct $3000 each year going forward until it's all accounted for?
Thanks for any assistance.
