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Author: randypj Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308463  
Subject: OT: Bankruptcy and tax break? Date: 11/14/2001 12:59 PM
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I know it's OT, and there is probably a BK board I should have put this on, but, I know this board........

A friend who owes me ~$4500 just filed BK (chap 7). He told me a month ago he was going to, so it's not a surprise. I received notice of the filing, and have til Jan. to reply. I guess I'm considered one of the creditors.

1. Don't I get to deduct this as a bad loan? I can't remember but I was thinking I do.

2. If so, do I need to file/reply so that they send back a definite $$$ figure, so I have that for IRS records? The notice did not have a specific $$$ figure.

3. Anything else you can think of that I should do to protect any rights? He was a buddy and still will be. It was a combo of job related and depression that did him in. Personally, I advised against it.

4. Any site/FAQ info on this kind of thing? Anyone else had a similar situation?
Thanks.
--Randy
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Author: Leviathan Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97770 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/14/2001 3:16 PM
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A friend who owes me ~$4500 just filed BK (chap 7). He told me a month ago he was going to, so it's not a surprise. I received notice of the filing, and have til Jan. to reply. I guess I'm considered one of the creditors.

1. Don't I get to deduct this as a bad loan? I can't remember but I was thinking I do.

2. If so, do I need to file/reply so that they send back a definite $$$ figure, so I have that for IRS records? The notice did not have a specific $$$ figure.

3. Anything else you can think of that I should do to protect any rights? He was a buddy and still will be. It was a combo of job related and depression that did him in. Personally, I advised against it.

4. Any site/FAQ info on this kind of thing? Anyone else had a similar situation?


Of the top of my head, I don't know what happens on your end of the bankruptcy. I guess it's fair to say that you had a written agreement with him about the debt. You might just want to get the advisement of a bankruptcy attorney so that you don't run afoul of federal law and cause you more headaches. I don't know any more than that and I'd hate to give you bad advice over none. Good luck with it, though.

Leviathan

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Author: DeltaDog2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97790 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/14/2001 6:05 PM
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Ick.. I am with Leviathan, I can't provide good advice so I'd rather not provide something that would send you in the wrong direction.

I just wanted to say, I'm sorry you're having to deal with this! I'm glad you're able to stay friends with him, though. Good luck to you,

Nikki

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Author: wildgirl Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97918 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/15/2001 4:27 PM
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www.irs.gov 1.800.829.3676

Publication 550 is what you need. You can deduct 3k a year from the year the debt goes bad or "becomes worthless" in the IRS lingo.

Deduct this on Schedule D Form 1040. You need a separate detailed statement along with this detailing that this is NOT a worthless business loan.

Investment Income and Expenses is the official IRS booklet on this topic. Once again, the government is here to help us.

wild :)

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Author: randypj Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97957 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/15/2001 8:48 PM
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Thank y'all for the thoughts, and thanks wdg for the info. I itemize, so I'll grab it.

He's actually a good guy. Much of the $$$$'s was profit from our sales on ebay, quite a bit of it was $$$'s from pc/audio/video stuff that I told him he could pay me for later. He's kept a spreadsheet on everything, and actually paid me $800 a few months ago, before he lost his job.

If it wasn't for him, I prolly wouldn't have the pc knowledge that has allowed me to have the job I now have and like. Aw....I guess if this is the worst that ever happens, I'll live. But....it sure would have helped to have the $$$'s to hit the cc bills with.
--Randy

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Author: wildgirl Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97961 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/15/2001 8:57 PM
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I can't bring myself to file papers at the last known address (my MIL) and get a judgement on my junkie stepkid who is tune to me for nearly 5K by now. That will be one of the highlights of the divorce from Husband #1. Or as my lawyer puts it ... "How bad does he want rid of you?"

Funny, I just had a nice phone conversation with him. Hub #1 not the attorney. But it's tough to have to collect. No more money loaned!!!

wild :)
who will loan again. Sigh..

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Author: Mangard Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97983 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/16/2001 9:21 AM
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Wildgirl,

Don't make us do an "intervention" to make you stop giving to the junkie. At least I hope you meant something else as message was a little cryptic.

Mangard

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Author: wildgirl Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 97988 of 308463
Subject: Re: OT: Bankruptcy and tax break? Date: 11/16/2001 9:57 AM
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Oh dear.. she is the least of the worries. She has been a "felon fugitive" from the Commonwealth of PA since she stole that check out of here and forged it a few years ago. She will turn up.

I plan on waiting. The interest clock still ticks.

Now off to work!

wild :)

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