loss to bankrupt

[joe_be]

Contract for home Solar roof and panels. Project started with poor work then abandoned. Loss $55000.

Contractor has filed for bankruptcy

[Anonymous_]

I'll page @Mike9241 

[Opus 17]

You probably have a non-business bad debt.  However, you can't deduct any loss until the debt is final.  In this case, that means waiting for the bankruptcy proceeding to finalize so you can determine if you will recover anything and how much.   You must also take all legal steps available to you to collect the debt–in this case, that would mean making sure you are listed as a creditor on the bankruptcy. 

See this blog post.

https://turbotax.intuit.com/tax-tips/irs-tax-return/how-to-report-non-business-bad-debt-on-a-tax-ret...

(Where the blog talks about loans, it also applies to unfulfilled business arrangements.)

Also see here,

https://www.irs.gov/taxtopics/tc453