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Good morning. Unfortunately, if the person will not pay voluntarily, you will have to file suit against him. But, that gives you more options than you have currently. Once the suit is filed and ajudgment awarded, you become a judgment creditor and can have the sheriff servea summons on the losing party for a debtor examination. That forces the losingparty to meet the judgment creditor in court and answer questions under oathabout the losing party's assets. After that information is obtained, the judgment creditor has the power to garnish wages, attach bankaccounts, and/or have the sheriff seize other property to satisfy the judgment.
From a tax standpoint, however, you would not be entitled to a deduction personally or as a business because you never recognized the income. Had you been an accrual basis taxpayer and reported this as income previously, then you could then later write it off when uncollectible. But, as a cash basis taxpayer, it's not income until you receive it and the only benefit that you get is the fact that you never had to report it as income.
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Thanks for allowing me to be of service to you. Please beaware that the information provided here is not legal advice. Rather it issimply general information. All states have intricacies in their laws and anyinformation given is simply information only and specifically is notintended to be, nor does it constitute, legaladvice. This communication does not establish an attorney-client relationshipwith you. I hope this answer has been helpful to you.
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