I made a loan to my friend who died without repaying me, and there’s nothing in her estate. What do I have to do to claim a nonbusiness bad debt?

You must attach your own statement to your tax return that includes the following information:

• The transaction was a loan and not a gift (this can be proven by showing a promissory note that included interest and other payment terms).
• A showing that the debt had value at the end of last year and became wholly worthless this year. For example, a statement from the debtor’s executor regarding the lack of assets in the estate would be helpful here.
• Proof that you tried to collect on the debt (e.g., you submitted a request for payment from the executor but decided not to sue when you learned there were no assets in the estate).