12 year old judgement

[DDDDDD]

What is the name of your state (only U.S. law)?

New York

12 years ago I got a small claims jusdgement against a friend who I sold a car to but he never paid for. Since the judgement has been filed I have not, knowing full well his financial circumstances, made any attempt at collecting.

Can I write off this bad debt on my Federal income taxes?

 

[racer72]

Simple answer, no.

 

[davew128]

Simple answer, no.

Correct answer, yes.

Non-business bad debts can be deducted as a short term capital loss in the year it is determined to be uncollectible.

Of course the problem is that it would have been deductible......probably around 10-12 years ago when it became uncollectible....

 

[LdiJ]

Correct answer, yes.

Non-business bad debts can be deducted as a short term capital loss in the year it is determined to be uncollectible.

Of course the problem is that it would have been deductible......probably around 10-12 years ago when it became uncollectible....

I disagree a bit. It becomes collectable when all reasonable efforts to collect on a judgement fail.

He never tried to collect at all. If the statute of limitations has run out on the judgement, then he can no longer collect.

I would want to research case law before being certain, but my guess is that its non-deductible now, because he never tried to collect prior to the statute of limitations expiring.