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A.J.
A.J., Attorney
Category: Bankruptcy Law
Satisfied Customers: 4300
Experience:  Experienced consumer bankruptcy attorney.
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I invested in an unsecured note and the issuer has filed bankruptcy.

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I invested in an unsecured note and the issuer has filed bankruptcy. Is there any tax write-off for this loss?

SavyLawyer :

Hello, and thank you for contacting the Just Answer team.

SavyLawyer :

What type of bankruptcy are we talking about? Is it a chapter 7?

SavyLawyer :

I'm sorry, I meant a chapter 11?

Customer:

It is a chapter 7

SavyLawyer :

Yes, if a debt is discharged in a chapter 7 bankruptcy you can generally consider it a loss and as such you can take a deduction on the loss.

SavyLawyer :

I believe it is called a "short-term capital loss", and can be taken as an itemized deduction.

SavyLawyer :

In such a case, to make sure that it is being reported properly, have a certified public accountant review your tax filings prior to filing your return.

SavyLawyer :

Also keep in mind that a capital loss is reported on schedule "D", form "1040".

SavyLawyer :

I hope this helps, and let me know if you have any further questions. Otherwise, please remember to click the ACCEPT button so that I can receive credit for my work.

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