Bad Debt Reporting

Forum|Forum|1 year ago
January 28, 2025
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My business loaned a person $40,000 which has not been repaid despite there being a contract. How do I report this on the business' taxes? Also, is there a way I can report that the person received $40,000 income from my business? As they haven't repaid the loan, I think they should at least pay taxes on what they stole from my business! I do not have their SSN but I have their name and address.

Not A Product Question

RobertB4444

Before putting it on a tax return you may want to consult with an attorney. Once you have entered it into your tax return and taken credit for having issued the payment to them then it may effect your legal recourse to collect the money. You should only enter a bad debt into your taxes when you are certain it is unrecoverable.

If you are sure that there is no legal recourse and that you can not get any part of the money then you will issue a 1099-NEC to this person. You will have to manually prepare the form since you don't have a social security number. In the box for social security number you write "refused". Then you mail in the 1096 and 1099.

@HiThere4

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