Loan to "friend" loss I am disabled and probably a little to gullible. I loaned money to "friend" trying to help him through some hard times. He swore up and down that he would pay me back and even signed a contract. Then he kept hitting me up for money for this crisis and that emergency until I have loan him many thousands of dollars that probably shouldn't have.
I found later that may "friend" has pretty much lied to me about a lot of things and then used quite a bit of the money I loaned him to buy heroin. He is off the drug now and still swears up and down that he will repay me. But, he has failed to hold a job for long and has pretty much no means to pay me back so far.
So, I'm trying to cut my losses as much as possible. I kept good records of all the money I loaned him. If I added up all of what the owes me and had him sign a promissory note or contract that says he owes me this money but has not been able to pay it back, can I deduct the money I loaned him from my taxable income?
Also, if I have to report to the IRS the name of guy the loan was to, will they make him pay income tax on it?
Finally, if am able to write this loan off as a loss and he begins paying me back at some time in the unforeseeable future, would I then report that as income? Thanks for your help. |