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You can take a deduction for a nonbusiness debt only if the entire debt is uncollectable. You do not have to wait until the entire debt is overdue to determine whether it is worthless. Nor do you have to file a lawsuit to collect the debt, obtain a judgment against the debtor, and then try, unsuccessfully, to collect on it — a process that can take years.
All that is required is for you to show that there is no longer any chance that the loan will be repaid. Obviously, you must show that you took reasonable steps to collect the debt. But even such collection efforts would not be required if the debtor files for bankruptcy, since such a filing stops all debt collection efforts by the debtor’s creditors.
Nonbusiness bad debts are treated as short-term capital losses. Such losses are first deducted from your short-term capital gains, if any. If your net short-term loss exceed your short-term gains, your net short-term capital losses are then deducted from your total long-term capital gains for the year. If your net short-term loss exceeds the long-term gain, the excess short-term loss is deductible against up to $3,000 of your other income. Any amount remaining can be carried forward and deducted in future years.
You'll enter a capital loss in the investment sales section. To claim a capital loss you will need to upgrade to TurboTax Online Premier. Note: If you only have a capital loss carryover from 2016 please see the second set of instructions below.
To enter a capital loss in TurboTax Online:
To enter a capital loss carryover in TurboTax Online:
Please see the FAQs below for more information.
Thank you but this only addresses TTO. What is the process for TTD please?
I need similar information for TTD. I would like to do tax loss harvesting and can't find a way in TTD.
You'll enter this under the Federal Taxes tab (or Personal, if working in TurboTax Self-Employed/Home & Business), then select Wages & Income, then Investment Income, then Stocks, Mutual Funds, Bonds, Other.
When you sell a capital asset, the difference between its cost basis and the selling price results in a capital gain or loss.
Your total capital gains for the year minus your total capital losses results in either a net capital gain or a net capital loss.
I invested some big amount in Notes by a energy company called Aspirity N Enery based out of Minnisotta. After few yeaI lost all the money as the company closed without giving us our investement bank plus promised interest as well. Thoughthis happened in 2019 and amount lost is close to 50K$. Thi court is still dealing with but no solution seems to be coming out as promotors have declared as bankrupu. Can we clain capital loss as long as i have a record of the investment details and statements starting from this year 2021 knowing the limit is $3000 per year. if so what forms to be filled up so that I can claim upto allowed limit every year until I claim all the loss in years ahead.
Any advise would be highly appreciated.
Thanks in advance.
Venkatraman Gopalakrishnan
You can take a deduction for a nonbusiness debt only if the entire debt is uncollectable. You do not have to wait until the entire debt is overdue to determine whether it is worthless. Nor do you have to file a lawsuit to collect the debt, obtain a judgment against the debtor, and then try, unsuccessfully, to collect on it — a process that can take years.
All that is required is for you to show that there is no longer any chance that the loan will be repaid. Obviously, you must show that you took reasonable steps to collect the debt. But even such collection efforts would not be required if the debtor files for bankruptcy, since such a filing stops all debt collection efforts by the debtor’s creditors.
Nonbusiness bad debts are treated as short-term capital losses. Such losses are first deducted from your short-term capital gains, if any. If your net short-term loss exceed your short-term gains, your net short-term capital losses are then deducted from your total long-term capital gains for the year. If your net short-term loss exceeds the long-term gain, the excess short-term loss is deductible against up to $3,000 of your other income. Any amount remaining can be carried forward and deducted in future years.
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