Posted by The Baze on March 07, 2000 at 12:15:21:
Mike,
You can write off a bad debt ONLY if the obligation was reported as income previuosly. As a cash basis taxpayer, which I’m sure you are, did you report the mortgage as income in the year you took it back? If not, then you cannot write off the debt. That’s what’s called double dipping and the friendly folks at the Internal Ripoff Service don’t care much for it. Hope this helps.
Tom Bazley
Can I write this off as bad debt?? - Posted by Mike
Posted by Mike on March 07, 2000 at 11:48:08:
A couple of years ago, I sold a property and carried back a second mortgage. I have never received a payment from the buyers and basically wrote it off because I had already made my profit when they got a new first mortgage. Back in December '99, I received word that these people were being foreclosed upon and that unless I put up a fight, I will be losing my rights to the second mortgage. Frankly, I didn’t care because I wrote it off long ago anyhow.
Now, I’m wondering if I can write this off as bad debt on my tax return. Any suggestions?
Thanks.