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Subject:  Re: Prepayment of Services to a Contractor Date:  8/14/2001  12:04 PM
Author:  kktice Number:  53324 of 121572

This loss is not a "bad debt",as the taxpayer did not "loan" the money to the contractor, but paid for services to be rendered. I suppose that there might be an opportunity for a casualty or theft loss deduction from ordinary income- which is deductible first by reducing by $100, then to the extent the the loss exceeds 10% of adjusted gross income. See Internal Revenue Code section 165(h)
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