Are you a soft touch? Have you lent money to relatives or friends and never been repaid? If so, you may at least be able to get a tax deduction for the bad loan. As far as the bad debt deduction is concerned, there are two types of debts: business and nonbusiness. Business debts arise from the conduct of your business. Nonbusiness debts arise from your nonbusiness activities, such as making personal investments or personal activities. Money you lend friends, relatives and others for purposes other than use for a business in which you actively participate is a nonbusiness debt. So if you loan money to your no-good brother-in-law and he never pays it back, can you deduct the amount from your taxes as a bad debt? Maybe. Nonbusiness bad debts can be deducted as short-term cap...
May 31, 2013 by Stephen Fishman
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