Personal loan to a friend that wasn't repaid
Up to $3,000/yr
Can You Write Off Personal Loan to a Friend That Wasn't Repaid?
Short answer: A genuine personal loan that's totally worthless is a short-term capital loss, limited to $3,000 a year against other income.
Gifts disguised as loans don't qualify.
Records to keep: Keep receipts or invoices, proof of payment, and a note of the business purpose for each expense.
BW-B23-00667
medium risk
Personal loan to a friend that wasn't repaid
Typical range: Up to $3,000/yr
General Business
Other Expenses
Tax Write-Off Rules
A genuine personal loan that's totally worthless is a short-term capital loss, limited to $3,000 a year against other income.
BizWriteOffs provides educational information only and is not tax, legal, or accounting advice. Deductibility depends on your specific facts and records. Consult a qualified tax professional.
Business justification
A genuine personal loan that's totally worthless is a short-term capital loss, limited to $3,000 a year against other income. Gifts disguised as loans don't qualify.
Category
- Tax Write-Off Rules
tax rule
search demand 2026 b23
losses records
business losses