After how many years can I claim a non business debt. My lawyer passed away on December 2005, I loaned him money in September 2005 to be re-payed in December 2005 (With Interest) but he never re-payed the loan. I filed Papers with Supreme Court on March 2007. Family never had any probate because the Lawyer was involved in a" Ponzie" scheme and the family is broke. I've exhausted every avenue but unable to recover any monies either from the attorney general of New York or the Family.
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A claim for refund or credit based on a bad debt deduction under IRC Section 166 or Section 832(c) or a worthless security loss under IRC Section 165(g) may be filed within seven years from the due date of the return for the year with respect to which the claim is made (determined without regard to any extension of time to file). See IRC Section 6511(d)(1).
If the deductibility of the bad debt or worthless security loss affects a Net Operating Loss (NOL) carryback, the period is the later of:
Seven years from the due date of the return for the year in which the NOL arose (determined without regard to any extension of time to file), or
See IRM 25.6.1.10.2.8.1, Net Operating Loss (NOL) Carryback or Capital Loss Carryback, the period for which the NOL arose.
Limitation. The overpayment must be attributable to the deductibility of the bad debt or worthless security loss.
A claim for refund or credit based on a bad debt deduction under IRC Section 166 or Section 832(c) or a worthless security loss under IRC Section 165(g) may be filed within seven years from the due date of the return for the year with respect to which the claim is made (determined without regard to any extension of time to file). See IRC Section 6511(d)(1).
If the deductibility of the bad debt or worthless security loss affects a Net Operating Loss (NOL) carryback, the period is the later of:
Seven years from the due date of the return for the year in which the NOL arose (determined without regard to any extension of time to file), or
See IRM 25.6.1.10.2.8.1, Net Operating Loss (NOL) Carryback or Capital Loss Carryback, the period for which the NOL arose.
Limitation. The overpayment must be attributable to the deductibility of the bad debt or worthless security loss.
You report the bad debt when it became worthless. According to the IRS, it become worthless when when "the surrounding facts and circumstances indicate there's no reasonable expectation of payment" after you've taken "reasonable steps" to collect it. https://www.irs.gov/taxtopics/tc450/tc453
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