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Report a nonbusiness bad debt on form 8949

Follow these steps to report a nonbusiness bad debt on Form 949. Refer to Publication 550 for more information about bad debt.
  1. Open the
    B&D
     screen in the
    Income
     folder, then the
    Schedule for detail
     statement.
  2. Select
    3 Box C or F - Not reported on 1099-B
     in the 8949 Box column.
  3. Select
    N Nonbusiness
     in the Type column.
  4. Enter the name of the debtor and
    bad debt statement attached
     in the Desc column.
    tip
    If you run out of space, abbreviate the debtor name.
  5. Enter
    Wrthless
     in the Date Acq'd and Date Sold columns.
  6. Make sure that
    1
     displays in the 1=S, 2=L, 3=28% column. If it doesn't, select
    1 Short-term
     in the Force column.
  7. Enter the basis of the bad debt in the Cost/Basis column.
  8. Enter
    0
     in the Sales Price column.
  9. Per Publication 550, attach a statement to the tax return for each bad debt. The statement needs to contain the following:
    1. A description of the debt, including the amount, and the date it became due.
    2. The name of the debtor, and any business or family relationship between the taxpayer and the debtor.
    3. The efforts the taxpayer made to collect the debt.
    4. The reason that the taxpayer decided the debt was worthless. For example, show that the borrower has declared bankruptcy, or that legal action to collect would probably not result in payment of any part of the debt.

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