Vanessa A
Expert Alumni

Retirement tax questions

It depends on what the claims were for.  If you lent money to people, then yes, you can claim it is a non business bad debt since they have become fully and totally worthless.  This would mean you would drop any forms of further trying to collect as you know they are no longer collectible.  

You cannot include interest or penalties.  Also, if the judgements had to do with a lawsuit or something else where you did not directly lose out on something YOU PUT IN, you cannot deduct this.  For example, if you went to a restaurant and had a bee in your burger and sued for $10,000 and won, that would not be something that you could claim as a non business bad debt.  

However, if you went to the restaurant and lent one of the employees $10,000 that $10k would be a non business bad debt that you would be able to deduct. 

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