There may be nothing to claim or report, it would be scrutinized by the IRS because it was a relative which may be viewed as a personal loss which is not allowed to be used to offset other income on your tax return.
Some other facts and circumstances that could come into consideration on your part.
IRS is likely to question any non-business bad debt very closely and especially in the case of a debt to a relative. You will need to be able to show that the loan was made in a professional manner, that you had appropriate paperwork, following a payment schedule, that you were reporting any interest payments as income, and so on (neither of the latter took place for you). You are also going to have to show that you made diligent efforts to collect the debt such as legal action and documentation.
If you do not have the necessary backup then you should not take a bad debt entry on your tax return.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
