I gave a loan to my father in India. Unfortunately, he passed away. can I claim a non business debt deduction on my tax?

Forum|Forum|3 years ago
January 18, 2023
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Anonymous_

Level 15

I will page Champ @pk12_2. Check back.

pk_

Level 15

@sgfaizani , I am sorry for your loss.

Yes , you can indeed claim "loss of Capital" for noncollectable personal loan. Here is a reference on the subject for federal purposes--> https://www.irs.gov/taxtopics/tc453

However, things may make it difficult to sustain an audit are :

(a) loan to a related party

(b) documentation to prove this was done at arms length

(c) prove Estate's inability to satisfy the loan ( debts of the decedent would normally be recognized by the Estate before distribution of assets to the heirs).

(d) Hindu Succession Act and Insolvency Acts may apply here. There is no Tax Treaty Effect here

Is there more I can do for you ?