Jan R asked:
I loaned a friend some money several years ago to help start a business, and the business failed and I was not repaid for the loan. I also, the same year, had losses from other investments (in the stock market). My understanding is that I can only deduct $3000 in investment losses for that year. Is the personal loan in the same category as the other investments — in other words, does it count as part of the $3000 limit? Or is there a way I can claim that loss separately? Thanks!
I loaned a friend some money several years ago to help start a business, and the business failed and I was not repaid for the loan. I also, the same year, had losses from other investments (in the stock market). My understanding is that I can only deduct $3000 in investment losses for that year. Is the personal loan in the same category as the other investments — in other words, does it count as part of the $3000 limit? Or is there a way I can claim that loss separately? Thanks!
You cannot claim the loss separately.
You must prove you had a non-business bad debt (actual loan agreement, not some iffy thing as in if he made money, he’d pay you back; show you tried to get repaid; why it’s worthless, etc).