Individual Returns

Business Bad Debt

Business bad debts can be entered as an other expense on the related schedule that reports that business income.

• If filing Schedule C – Go to screen C and enter the business-related bad debt as Other expenses(line 27a).

• If filing Schedule F – Go to screen F and enter the business-related bad debt as Other expenses (line 32).

Non-Business Bad Debt

Enter deductible, non-business bad debt as a short-term capital loss on screen 8949. An attachment is required for each bad debt reported. (See Drake Tax – e-File Attachments.)

Business Returns

Enter total business-related debts that became worthless in whole or in part during the year in the Bad debts field on screen DED. Bad debts carry to:

• Form 1120, line 15

• Form 1120-S, line 10

• Form 1065, line 12

Enter deductible, non-business bad debt as a short-term capital loss on screen 8949. An attachment is required for each bad debt reported. (See Drake Tax – e-File Attachments.)

Resources

For more information on business and non-business bad debts see:

• Publication 334

• Publication 535

• Publication 550

• Schedule C Instructions

• Schedule F Instructions

• Tax Topic 453