I loaned a friend $4,600.then she suddenly passed away without paying me anything back can I claim non business bad debt?

[Opus 17]

Yes, but...

The but is, that if you are audited, it can be very difficult to prove this was a legitimate, businesslike loan.  Did you have a signed contract?  Did you charge interest, and did you report the interest as taxable income on your tax return?  Also, you must take all reasonable steps to collect on the loan before you can declare it a bad debt.  In this case, that means filing a claim with the probate court.  If you can prove to the court this is a legitimate debt, the estate must settle its debts (including paying you), before any residual amounts can be distributed to children or other heirs.  If you failed to make a claim (maybe because this was a friend and you wanted the children to have more of the estate), then you forfeited your debt and also forfeited the right to take the non-business bad debt deduction.  And if the probate court rejects your claim as unprovable, it is likely the IRS would see it the same way if you were audited.