I'm a contractor & client wont pay for labor & materials already provided in 2016. Where do I deduct this or claim a loss?

[ak82]

Client refuses to pay for materials I already bought & labor already provided even tho it's in the contract. We're walking away but now I want to claim those materials & hours as a loss. Where do I do that?

[MinhT]

Unfortunately, you cannot claim the amount that your client refused to pay as a loss.

In fact, it is already built into the profit or loss of your business. As you did not get paid by the client, you do not report the income. You still claim the costs incurred in the project and your profit will be lower than if the client had paid you.