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mike45
New Member

I paid a company $29,000 to build an online sales sight. I paid for drop shippers, licenses, hosting and more and never got a functioning site. How can I claim losses?

 
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PatriciaV
Employee Tax Expert

I paid a company $29,000 to build an online sales sight. I paid for drop shippers, licenses, hosting and more and never got a functioning site. How can I claim losses?

Yes, if this expense relates to an ongoing business activity with the intent to make a profit, you may report the expense on Schedule C (Business Income & Expenses).

If this was not part of a business activity, you may report this as a non-business bad debt (short-term capital loss). This is reported under Investments and will be included on Form 8949 as part of your tax return.

The easiest way to find this section of TurboTax is to use the Search box at the top right side of the TurboTax header. Click on the magnifying glass, type in "bad debt, non-business", hit Enter, and click on "jump to bad debt, non-business" to go directly to beginning of this topic.

Or go to My Account >> Tools >> Topic Search. Type in "bad debt, non-business", then click the topic in the list to go directly to the start of this section.

Follow the prompts to add an Investment "Sale". Answer "no" for Form 1099-B, then choose "Uncollectible Debt" (see screenshot below - click to enlarge). Your entries will be entered on Form 8949 and filed with your return.

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1 Reply
PatriciaV
Employee Tax Expert

I paid a company $29,000 to build an online sales sight. I paid for drop shippers, licenses, hosting and more and never got a functioning site. How can I claim losses?

Yes, if this expense relates to an ongoing business activity with the intent to make a profit, you may report the expense on Schedule C (Business Income & Expenses).

If this was not part of a business activity, you may report this as a non-business bad debt (short-term capital loss). This is reported under Investments and will be included on Form 8949 as part of your tax return.

The easiest way to find this section of TurboTax is to use the Search box at the top right side of the TurboTax header. Click on the magnifying glass, type in "bad debt, non-business", hit Enter, and click on "jump to bad debt, non-business" to go directly to beginning of this topic.

Or go to My Account >> Tools >> Topic Search. Type in "bad debt, non-business", then click the topic in the list to go directly to the start of this section.

Follow the prompts to add an Investment "Sale". Answer "no" for Form 1099-B, then choose "Uncollectible Debt" (see screenshot below - click to enlarge). Your entries will be entered on Form 8949 and filed with your return.

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