Form 8949 for bad debt - need to attach supporting documents

Forum|Forum|3 years ago
April 4, 2023
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I made a loan to an LLC for a real estate project. The LLC was unable to pay back the loan and part of the loan has permanently lost principal. As per Turbotax guide: https://turbotax.intuit.com/tax-tips/irs-tax-return/how-to-report-non-business-bad-debt-on-a-tax-return/L1mUzQFtB

It says that we can report the loss on Form 8949 Sales and Other Disposition of Capital Assets. However, the guide also says that we are required to attach a bad-debt statement to my tax returning, explaining the details of the loan I made.

Questions:

1) How can I attach a supporting bad debt statement to my tax return using turbotax desktop version, home and business?

2) How much of the loan can I write off in a year, and can I write it off against w2 income or only against capital gains?

Thanks much!

TurboTax Home & Biz Windows

ThomasM125

You can use the TurboTax desktop program to access the Nonbusiness Bad Debt Explanation statement that you can digitally attach to your tax return. You will find it in the Forms menu option by clicking on the Open Form option and typing in the name of the statement. The loss is a short-term capital loss that is available to offset capital gains and then up to $3,000 of ordinary income (W-2 income) per year.

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mikeynyc123Author

How do I create a NEW form 8949? When I click in forms view under turbotax desktop, it says forms 8949 are created automatically, based on schedule D input. However, this will be for a bad debt that I don't have a schedule D document for. I also don't see where I can add an attachment.

mikeynyc123Author

Also, there is no place I can ATTACH supporting documents, there is only a place for me to TYPE in an explanation. I would like to attach a document to the tax return. Could you please help? Thanks