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Old 02-13-2009, 08:31 AM
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TAx write-off of uncollected lawsuit

I won a small claimes judgement a couple of years ago and have not been able to collect. Can I write this off on my tax return and, if so, how??



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Old 02-14-2009, 12:01 AM
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Regretably, you cannot write this off as you are considered a Cash Basis reporting taxpayer and you cannot deduct this loss in the potential income! This money was not previously reported as income on the tax return, at the time when you won the judgement in the small claims court. Thus, since it was not recorded as income in the first place, the current IRS tax code would not allow you to deduct the non-collectibility of your small claims judgement.

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