Can I deduct my small claim court judgment of $10,000 from a loan that it can't be collected from debtor?

Forum|Forum|6 years ago
June 4, 2019
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I won the court case but the debtor hasn't paid anything of the $10,000. I have made expenses with lawyer and investigator for collecting my money: bank levy, wage garnishment, or a real estate lien. Nothing. He is hiding.

I would like to know if I can deduct that money that I lend him for his business and it has been not paid. Or the expenses for the lawyer and investigator.

The court sentence is dated January 17, 2018.

TurboTax Deluxe Online

Best answer by Hal_Al

You have a bad debt. A bad debt is deducted as a short term capital loss. In TurboTax (TT), type> bad debt, non-business <in the find box, then click on "jump to". That will take you to the entry point.

Lawyer fees and other expenses are no longer deductible, under the new tax law. Even under the old law, they were only deductible as a Misc. itemized deduction subject to the 2% of AGI threshold.

One requirement to write off a bad debt, is that it be noncollectable. It appears that you meet that criteria. If you later do collect it, you will have to report the money as income.

Hal_AlAnswer

Employee

Lawyer fees and other expenses are no longer deductible, under the new tax law. Even under the old law, they were only deductible as a Misc. itemized deduction subject to the 2% of AGI threshold.

One requirement to write off a bad debt, is that it be noncollectable. It appears that you meet that criteria. If you later do collect it, you will have to report the money as income.

jj152

Same Issue here.

Says online I can file debt forgiveness 1099c as creditor and take as income loss - but Turbotax only allows me to file as debtor? Also, the advice says you can just claim as loss, but doesn't actually allow you to? The 'search' he recommends doesn't give anything helpful?

May have to hire tax person and not use turbotax this year?