• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Worthless Debt

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

What is the name of your state?CO

My husband invested $25,000 several years ago in what was supposed to be mortgage-backed loans. When his investment matured in 2004, we paid taxes on his $25,000 profit. He rolled the $50,000 over into a new investment at that time. We have paid estimated taxes since then. The company has filed Chapter 7. When and how do we claim this worthless debt on our taxes? Right now there is no way to tell what funds if any we'll ever receive.
 


abezon

Senior Member
You need to contact the BK court & get a copy of the filings to see if there are any assets for distribution. You can't declare the investment worthless until the BK court confirms that you'll get nothing. Since your income will be back down in 2005, you did not need to pay estimated taxes. I suggest you file your return ASAP to get your money back.

Your investment is $50,000. If you get nothing, that's what you'll claim as a bad debt. Look up 'bad debt' on the IRS site for different tax treatments. You'll need to decide what's best for you. I suggest a tax pro.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top