TP is a licensed contractor and loaned another licensed contractor $35,000. The TP had previously received a request from the loanee for an estimate to on a project. The loanee wrote a hot check in 2009 to pay off the loan. The TP has not reported this to the police as he feels he has a better chance of collecting the money if he does not. What is his best choice in deducting this loss?
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Legal action must be taken/exausted to prove efforts to collect the debt before it can be written off.Originally posted by sd2053 View PostThis post is for discussion purposes only and should be verified with other sources before actual use.
Many times I post additional info on the post, Click on "message board" for updated content. -
In addition to the fact that he can't deduct the loss, the circumstances as described have my alarm bells going off all over the place. (I'm thinking of a quote made famous by by Larsen E. Whipsnade)Last edited by JohnH; 03-16-2010, 06:28 PM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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Well, don't keep us in suspense. What did that Whippersnapper Whipsnade actually say?Originally posted by JohnH View Post
Also answer me this. Why do my Georgia clients mail their balance due to IRS in
Atlanta, while Alabama residents send their payments to your town?
IMWTK.ChEAr$,
Harlan Lunsford, EA n LAComment
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"As my grandfather Litvak used to say (just before they sprung the trap), never give a sucker an even break or smarten up a chump"
Larsen E. Whipsnade in WC Fields' movie "You Can't Cheat An Honest Man".
(I especially liked the pronunciation of Whipsnade's first name & initial)
As for where the payments are mailed, I guess it relates back to how the payoffs had to be handed out on some piece of legislation. The NC representative's vote was needed more than the Alabama representative's, and the Georgia representative's vote had already beed traded off on some prior legislation. (Most realistic & believeable reason I can think of )
There are lots of bank lock box service arrangements in Charlotte since it is (or at least used to be) a big banking center.Last edited by JohnH; 03-17-2010, 06:13 AM."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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NOL instead of theft?
Would it work for him to not take it as a theft loss but as a business bad debt and then take a NOL back two years and forward 20.Comment
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There needs to be a police report for a theft deduction.Comment
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Writing a bad check is against the law and he could bring charges. However, he may be able to just go to small claims court and get a judgement, after notifying the guy in writing that this is what he is going to do if it remains unpaid. That puts it in court records if he has a valid, legal loan or promissory note, and he may eventually get his money back as it goes on the guy's credit record. He can't deduct a bad debt until it is deemed worthless. That might be a bit in the future. I am also not sure $35K would be eligible for small claims but he could check it out.Last edited by Burke; 03-17-2010, 05:04 PM.Comment
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