Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 1
I have a question on if I can deduct a debt that is not repaid on my taxes. We made a loan to FIL several years ago on which I have a Promissory Note. While he was still living, he made several payments against it, and I reported the interest paid on our taxes as required. However, he passed away 2 years ago, and we do not expect to get the remaining balance from his estate due to the Medicaid lien. Does that mean that I can deduct the remaining balance as a bad debt? If so, how do I report that?

We are hoping that his estate will be closed out this year, and so I will know that the debt is bad. If it goes until 2014, I'd be reporting it there instead, but I don't think that makes a difference in terms of my question.

I found some information on the IRS website about bad debts, but it talked about business loans, and this didn't feel like it fit in that category.

Do you need any additional information to answer my question?
Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.