Last year we finished our arbitration case where a house contractor walked off the job in the middle of our house renovation. In court the contractor said he became sick and ran out of money and closed the business, although he never officially put his corporation through bankruptcy, the business no longer operates. We won the arbitration case against the corporation, but have not and probably will not collect any money. Can we deduct our loss on our taxes?
2006-10-31 03:41:40 · 2 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ United States
This might help - it's regarding bad debt deductions. See if it applies to you.
http://www.irs.gov/taxtopics/tc453.html
2006-10-31 04:16:45 · answer #1 · answered by porkchop 5 · 0⤊ 0⤋
Yes you can deduct the amount of the fraud- you paid him for something, whether he finished it or not you spend the money on your house... but anything you recover in court will have to be claimed as income if you do that.
2006-10-31 13:44:08 · answer #2 · answered by Jason 6 · 0⤊ 1⤋