Curt loaned thomas (a friend) 20,000 in 2005 with the agreement that the loan would be repaid in two years. In 2006, Thomas filed for bankruptcy and Curt learned that he could expect to receive .30 on the dollar. In 2007, final settlement was made and Curt received 4,000. Assuming the loan is a nonbusiness bad debt, how will Curt account for the bad debt?
I'm going bananas on how to approach this question. Can someone please shed some light?
2007-10-28 14:28:07 · 1 answers · asked by Mimi 1 in Business & Finance ➔ Personal Finance
Can a personal loan be considered a loss of capital? If so the remaining $16,000 can be written off against capital gains. If it is a personal thing then the most that can be written off against income would be $3,000 according to the IRS. Best to confirm by asking IRS. Any residual can be carried forward to succeeding years.
2007-10-28 14:38:36 · answer #1 · answered by googie 7 · 0⤊ 0⤋