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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4676
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I did a personal guarantee on a business loan. Now the

Customer Question

I did a personal guarantee on a business loan. Now the lender is collecting from me personally. Can i deduct this on my 1040?
Submitted: 2 years ago.
Category: Tax
Expert:  PDtax replied 2 years ago.

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

Expert:  PDtax replied 2 years ago.

You can deduct the payments from a loan guarantee for a business loan. There are two types of these deductions, business and nonbusiness bad debts.

If you can provide some background, I can advise which treatment you likely qualify for.

Customer: replied 2 years ago.
Ok. I personally guaranteed $200,000 for money advanced to a company that no longer exists. I have paid the lender in 2014 out of personal funds. Where on my 1040 can i deduct this loss?
Expert:  PDtax replied 2 years ago.

You likely qualify for a business bad debt, which is an ordinary loss on Form 1040. Deduct your payments on 1040, line 36, Other deductions.

You might want to include an explanation of the guarantee to support the deduction. Up to you.

Thanks for asking at Just Answer. Positive feedback is appreciated. I'm PDtax.