Non-Business bad debt

[Gene V]

I have a client that qualifies for a non-business bad debt. (this was a loan for $20,000)

My question is—can he deduct the attorney fees for trying to collect the bad debt?

Some thoughts—would he add the fees to the base of the debt?
Or would they be deductible on schedule A?

I know attorney fees are usually not deductible unless they pertain to taxable income.
I guess the taxable income would be the interest he was to get from the loan (bad debt).

Thanks for any thoughts

[Burke]

"Generally, legal expenses paid or incurred in recovering investment property and amounts of income includible in gross income are deductible." (Reg. 1.212-1(k). 6th Ct of Appeals, however, ruled that amts to recover stock were deductible only to the extent they were allocable to the recovery of interest and dividends. Was the recovery successful? If not, there is no income to report. Expenses incurred for the production of income are allowed as misc itemized ded on Sche A subj to 2% exclusion.

[Gene V]

"Generally, legal expenses paid or incurred in recovering investment property and amounts of income includible in gross income are deductible." (Reg. 1.212-1(k). 6th Ct of Appeals, however, ruled that amts to recover stock were deductible only to the extent they were allocable to the recovery of interest and dividends. Was the recovery successful? If not, there is no income to report. Expenses incurred for the production of income are allowed as misc itemized ded on Sche A subj to 2% exclusion.

Thanks Burke,