Sick in the Mo ... Ask TaxMama ... September 10, 2004

Ask TaxMama.Com
Tax Information With A Mother's Touch

Published by Eva Rosenberg, MBA, EA
Volume 6, Issue 275 September 10, 2004


	Huh?
	Child Care Credit Error
	EIN vs SSN
	To File or Not?
	Pension Withholding
	Sick in the Mo


	Free Domains?


	Reimels v. Commissioner


	The Year 1904

E-Mail
This Page To A Friend

Your email:

Your name:

TO email:

Sick in the Mo

» From: Montgomery City, MO

Dear TaxMama:

If I pay a relative's medical expenses relating to dental repair due to gum disease, may I deduct anything?

What are the parameters? (This relative is not my dependent.)

Also, what are the rules for losses due to "bad debts" that are not business related?

Thank you,

Jay

Hi Jay,

You're clearly a lovely person.

But IRS doesn't care.

Your relative must be your dependent for you to be able to take any deductions.

For them to be a relative, they must live with you and you have to provide over half their support - that's way too expensive just to get a deduction, wouldn't you say?

As to non-business bad debts?

Well, I have some bad news for you.

Before you can deduct them, you have to really go through contortions.

You have to prove the debt is uncollectible.
1. You have to prove that you tried to collect it either by showing lots of invoices, logs of phone calls, certified letters, or lawsuits.
  or
2. prove the borrower is insolvent or bankrupt.
Once you prove you can't collect it - you may only deduct in the year it became uncollectible. So if they file BK last year, you may have to go back and amend.

Got all that ...

OK, once you've established the situation and the year - you may deduct it on Schedule D as a short-term capital loss...regardless of how many years you've held that loan.

You can read more about it here.

Best wishes,

Eva Rosenberg
Your TaxMama

TaxMama's
Other Sites
TaxMama's Secrets
The Help Desk
PhotoMasterpieces
I-Laugh

Site design by Serenata Design.