Documented Mortgage Loan willl not be paid

[TAXNJ]

Taxpayer (not in the business of lending money) lent another individual 48K and had a mortgage note (1 yr @ 6% interest) recorded at the county courthouse in 2017. Apparently, the 1st lienholder (the bank) is foreclosing on the property. Is there a potential capital loss for any monies not recovered after all is said & done on the taxpayer's Sch D? Not sure about this one, looking for other opinions.

Robin

when you say, ...."Taxpayer (not in the business of lending money)", reference TTB 8-5 and IRS pub 550 section covering non business bad debt to see if applicable to your scenario and if so, see what and how to report.

[Rlmea]

Taxpayer (not in the business of lending money) lent another individual 48K and had a mortgage note (1 yr @ 6% interest) recorded at the county courthouse in 2017. Apparently, the 1st lienholder (the bank) is foreclosing on the property. Is there a potential capital loss for any monies not recovered after all is said & done on the taxpayer's Sch D? Not sure about this one, looking for other opinions.

Robin