Where do I enter a capital loss for a lien that could not be collected. I searched for capital loss and jump to capital loss. Online version takes me to Wages and income

 

Yes, you can claim this as a short-term capital loss in the year the debt becomes worthless as long as 

• there is an actual contract of the promissory note with the amount of the loan, interest rate, and repayment terms
• you can demonstrate that you don't have any hope of collecting any of what you are owed

This would be claimed in Part I of Form 8949.

 

To enter a non-business bad debt, follow the steps below.

•        Click on Federal Taxes (Personal using Home and Business)

•        Click on Wages and Income (Personal Income using Home and Business)

•        Click on I'll choose what I work on (if shown)

•        Under Investment Income

•        On Stocks, Mutual Funds, Bonds, Other, click the start or update button

 

 

Please see this TurtoTax Tip for more information.