How to cancel debt to me?

[davelist at mac.com]

On May 5, 2010, at 7:40 PM, Steve Juniper wrote:

> I lent a relative $20K. He paid back over time but lost his job 2 years ago and quit paying. How can I show just canceling his $12K debt? I presume that I couldn't just delete the amount I now show as a fixed asset. For tax purposes I do not want to try to show it as a loss for several reasons. Thanks. Steve J.


I think what I would do is make an entry Asset 12K, Expense:Gift 12K.

In the U.S. you can legally give away 13K a year (as of 2009 - it was lower before) without any tax ramifications so it should be a non-issue for the taxes.

Dave