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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4621
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I am acquainted with someone who, over the last few years,

Customer Question

I am acquainted with someone who, over the last few years, has "borrowed" sizeable amounts of money from several people. These loans were made without benefit of written agreements. It has become quite obvious that this person has no intention of paying any of this money back. At any time could this money be considered income and therefor taxable?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

Hi from Just Answer. I'm PDtax, and can assist.

The tax rules for deducting nonbusiness bad debts govern these transactions, and the lack of written agreements will be a major drawback to claiming the loss (if you are a lender).

Expert:  PDtax replied 2 years ago.

If you were the borrower, they will have the common argument that the monies were gifts, and therefore not taxable. The lack of loan evidence in fact supports this position.

Customer: replied 2 years ago.
Thanks. ***** was hoping for some way to get a little revenge by turning him in
Expert:  PDtax replied 2 years ago.

Positive feedback is appreciated. I'm PDtax.