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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I loaned a small business $20,000 to start up. I received

Customer Question

I loaned a small business $20,000 to start up. I received 3 payments of $725.00 dollars and then the business closed. I will not receive another payment so the net investment is lost. How do I proceed with my taxes? Can I write this off?
Submitted: 6 months ago.
Category: Tax
Expert:  Jonathan Tierney replied 6 months ago.
Hi, my name is ***** ***** I can help. A nonbusiness bad debt is deductible as a capital loss on Form 8949, which flows to Schedule D, and finally to Form 1040. You would report loss as a sale in which no 1099 was issued and report $2,175 as the proceeds and $20,000 as your basis, resulting in a $17,825 capital loss. I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions.Thanks, Jonathan