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Are collection fees associated with trying to collect a bad debt deductible my personal income tax return?

Business 3 views 2 answers
I paid $5000 for an asset search and $500 in court costs in trying to collect on a personal loan. I am deducting the personal loan as a bad debt on my tax return on Schedule D. Can I deduct the collection costs and the court fees and where on the tax return are they deductible.? Thank you

Attorney Answers

2
Phillip Smith ·
Collection fees incurred in connection with a non business bad debt is a miscellaneous itemized deduction that is reported on schedule A of your tax return. It is deductible under section 212 of the Internal Revenue Code as an expense incurred in connection with the collection of income. Good luck! Phillip M. Smith Jr. Los Angeles Tax & Business Attorney Licensed in the United States Tax Court www.culvercitytaxandbusinesslaw.com www.corporateattorney.com www.worlclasslawyers.com Call: 323-292-4116 or 562-505-1004
0 upvotes
Bruce Wilson ·
Costs associated with the production of income are deductible on your Schedule A. I would recommend that you read the instructions for Schedule A as to determine exactly where on the Schedule you deduct them or hire a competent tax preparer to assist you. BW
0 upvotes

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