Tax treatment of loan write off

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  • Florida_EA
    Senior Member
    • Aug 2017
    • 153
    #1

    Tax treatment of loan write off

    Client is in the lending business and writes off loans on the balance sheet due to not being able to collect them. How is the loss written off (capital or ordinary) and which form is used?
    Tags: None
    • Rapid Robert
      Senior Member
      • Oct 2015
      • 1983
      #2
      Originally posted by Florida_EA
      Client is in the lending business and writes off loans on the balance sheet due to not being able to collect them. How is the loss written off (capital or ordinary) and which form is used?
      I don't know the answer, but this question, and the other one about Hotel Income, look like they would make great tax school homework assignments, I'll save them off for future reference!
      "You said it, they'll never know the difference. Come on, we'll paint our way out!" - Moe Howard
      "That's enough! When you didn't know what you were talking about, you really had something! [to Curly]" -Moe Howard      ​

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        • Burke
          Senior Member
          • Jan 2008
          • 7068
          #3
          Business bad debts go on Sche C, 1065, 1120, etc. And don't forget to send out the 1099-C.

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