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Deducting Bad Debt at a Glance

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To deduct a bad debt, you must show that:

  • there was an intention at the time of the transaction to make a loan and not a gift; AND
  • you have no reasonable expectation that the nonbusiness bad debt will be repaid.

More Information

Tax Topic 453 - Bad Debt Deduction


Related Forms

Form 8949, Sales and Other Dispositions of Capital Assets (PDF)


Related Publications

Publication 17, Your Federal Income Tax - Chapter 14, Sale of Property - Under Capital Gains and Losses, see Nonbusiness Bad Debts for essential guidance

Publication 550, Investment Income and Expenses - Chapter 4, Sales and Trades of Investment Property - Under Capital Gains and Losses, see Nonbusiness Bad Debts for detailed guidance

Publication 535, Business Expenses - Chapter 10, Business Bad Debts - Detailed guidance

Page Last Reviewed or Updated: 25-Jan-2017