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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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I lost my new home construction deposit to a ...

Resolved Question:

I lost my new home construction deposit to a builder who went out of business. How do I enter this loss on my tax return? Paid the builder $25,065.00 deposit on 4/4/06 and an additional $3,000.00 on 6/28/06. I terminated the contract through an attorney on 1/4/07 after learning that builder had not even filed for permits yet. Builder has gone out of business. Attempted to recoup money through an attorney. Attorney received a judgment from the court against the builder but does not think I will get any money back.
Submitted: 9 years ago.
Category: Tax
Expert:  Jon Andrews replied 9 years ago.

Since the builder went out of business without providing you anything in return for your deposit, you should be able to use this as a non-business bad debt. This is reported on Schedule D as a short term capital loss.


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