How to report bad debts.(p111)Deduct nonbusiness bad debts as short-term capital losses on Form 8949.
Make sure you report your bad debt(s) (and any other short-term transactions for which you didn’t receive a Form 1099-B) on Form 8949, Part I, with box C checked.
For more information on Form 8949 and Schedule D (Form 1040), see
Reporting Capital Gains and Losses in chapter 16. See also Schedule D (Form 1040), Form 8949, and their separate instructions.
For each bad debt, attach a statement to your return that contains:
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A description of the debt, including the amount, and the date it became due;
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The name of the debtor, and any business or family relationship between you and the debtor;
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The efforts you made to collect the debt; and
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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.
