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I once asked an IRS agent at a tax seminar this same question. He said yes you could if the loans had originated from the business; even if the business was no longer operating. I had the same "lone item" audit concern and also asked about that. He said that it probably would stand out, but was not an automatic audit, and was a legitimate business deduction. So, if you're lucky, have no other risky items, and have the time for a possible audit... At the time (about 12 years ago) a client had sold her rental apartments, still owed a large loan on them, and we made her a "lone ranger" interest expense entry on an "E" for about three years. She was never audited. Regards, BB

I've been seeing some buzz about the tax worksheet changing, so I checked the instructions for Sch D and they are dated May 15, 2019. I ran the original instructions and the revised one through a difference checker, and found that line 18 of the worksheet is now 3 lines labeled a, b & c. Line b references the same amounts used in 199A calculations. I only had one or two returns that used the Sch D tax worksheet this year.

Putting it on Schedule C may not work since the business doesn't exist any more. More likely it qualifies as Investment Interest, which may or may not be useful given the increased standard deduction. The only other possibility is a capital loss deduction.