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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