Capital Gains and Losses
Questions and comments about tax rules for buying and selling stocks, mutual funds, real estate and other assets.
Capital Loss on Personal Loan for Funeral Expenses
Posted by: Marty456TTT, March 7, 2017 09:53PM
My wife's sisters husband passed away and the funeral expenses were about $13,000. I paid for the funeral and will create a loan agreement covering that expense.

The agreement will carry a 4% interest rate and has a repayment date for the principal and interest in 6 months. She may have to sell her house in order to repay the loan.

I will send payment requests by registered mail in advance of the due date and for several after the due date if it is unpaid.

How many letters would need to be sent before I can claim it as a capital loss should it not be repaid?

Re: Capital Loss on Personal Loan for Funeral Expenses
Posted by: Art, March 7, 2017 10:19PM
Are you willing to take her into court? If not, I wouldn't call it worthless. And remember, in tax language, once someone is an in-law, always an in-law

From what you said, this is sounding like a sham transaction. I would stay away from it.

Re: Capital Loss on Personal Loan for Funeral Expenses
Posted by: Drewremedy, March 8, 2017 01:45AM
A couple of letters and nothing more may smell a bit self serving ..hopefully there was a written promise pay at the time and not just invented after the fact ..I would agree wth above...unless you take her to court with a serious effort to collect it's going to smell like a sham loss

Re: Capital Loss on Personal Loan for Funeral Expenses
Posted by: Benn, March 9, 2017 05:23AM
If she gives you a formal promissory note in correct legal format and then fails to make timely payments, you may be able to sell the debt to a collection agency for a large discount. You would then be able to claim a capital loss for the difference between the face value and the amount you receive. The collection agency will probably be relentless and possibly unscrupulous in their efforts to collect for their own profit. But forget about any hopes of a cordial relationship with your in-laws after that.

Re: Capital Loss on Personal Loan for Funeral Expenses
Posted by: Drewremedy, March 10, 2017 12:10PM
I doubt you can sell the note for 5 cents on the dollar ....you can try...



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