Bad debt



We're sitting on a $67,000 2nd mortgage we agreed to carry
when we sold my wife's parents' house after they had died.
The holder of the first mortgage has taken the buyer into
foreclosure and the house will be sold at auction next
month. The buyer has *not* been late in paying on the
second mortgage, but has now declared bankruptcy and so we
expect no further payments from him (we'd like them, but we
don't expect to get them now that bankruptcy proceedings are
ongoing and foreclosure is imminent). (This was investment
property for him, not a primary residence).

That is merely background. The only question we have is
what are the tax implications for us if we have to write off
the whole $67,000 as a bonafide "bad debt"? How much can we
write off our taxes and over what period can we do it?


Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Similar Threads

USA Bad Debt Expense & Cash Basis P&L 4
Bad Debt 0
Bad debt 6
Is this a Bad Debt? 2
UK Bad debts 1
Help on Bad Debt 28
Is this a nonbusiness bad debt?? 3
Is this truly bad debt? 5