where is the interest deducted (form 1040) -- which section
2007-12-03 04:35:25 · 2 answers · asked by kitty 1 in Business & Finance ➔ Taxes ➔ United States
I apologize, I didn't explain. If you loaned money to someone and they signed a contract stating that they would pay with interest. Can you claim the loss?
2007-12-03 05:24:32 · update #1
If that person filed for bankrupcy...
2007-12-03 05:25:03 · update #2
Bad debt interest isn't deducted. You never received it, so you never paid tax on it, so there's nothing to deduct. You can take the deduction for the bad debt because you had already paid tax on the money you loaned out that resulted in the bad debt.
2007-12-03 05:12:54 · answer #1 · answered by Judy 7 · 0⤊ 0⤋
Judy hit the nail on the head. How you deduct the bad debt itself depends on whether it was business or non-business bad-debt.
See IRS Pub. 17 index.
2007-12-04 02:47:08 · answer #2 · answered by Hank Roitman, EA 4 · 1⤊ 0⤋