Loan loss

If you give education loan to your child who is not a dependant on your income tax return and the child refuses to pay the loan after the college study, can you take the loss against your earned income?

Touchy area. Always is when related parties are involved. Did the two of you have a *bonafide* *WRITTEN* loan agreement specifying payment terms and *INTEREST*? Did he make ANY payments on it?

Without proof that this is a bonafide loan, the IRS will probably consider it a gift - hence no bad debt deduction. BUT, even without the proof, IF it was actually a BONAFIDE loan, I'd take the deduction and see if it is challenged.

In an audit, you will probably lose without adequate proof.