Invested $20K in another guy's biz, and accumulated $30K credit cards/salary beginning in in Jan 2018. I left due to non-payment April 2019. What and when can I deduct?

[olsenbri]

Do I post either of them as a loss against earnings? I have not decided to sue yet.

[macuser_22]

It could be a capital loss in an investment if you have proper documentation that you invested and it was not a loan in disguise.     It has be be invested in anticipation of making a profit.   How were you to collect the profit?  Unless you have a contract, or other signed agreement of exactally what and how and when you were to receive a profit from the investment the IRS will probably disallow any loss.

What do you mean "non-payment"?  And salary? - were you an employee or partner that did not get paid - that does not sound like an investment - it sounds more like a buy-in or loan to a partnership.

You probably should discuss this with an attorney since it appears to be a legal problem.

[olsenbri]

I have bank statements that show he was given the money, I will have to look at my paperwork for the conditions of the loan. I do have all of the receipts for my personal credit card used for his business (yes, I know this is not good accounting practice, one of the reasons I left). Where would I report the credit card expenses?

[macuser_22]

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@olsenbri wrote:

...my paperwork for the conditions of the loan.

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That makes a difference.   Unless you have a business and file a Schedule C, and it was your business that made the loan to another business (for business purposes)  which "might" make it a business bad debt, then it cannot be deducted.

The TCJA (Tax Cuts and Jobs Act)  eliminated the personal bad debt deduction for tax years 2018-2025.