I invested in a LLC. In the first year, Form 1120S was sent with some losses and partners basis was reduced accordingly. Now LLC is no longer in business and has not sent any form for last two years. Can I write off the remainder of my investment. Can the entire amount be written off and how.
Taxpayers are allowed a capital loss for worthless securities held as capital assets. The loss can be taken only when the security becomes wholly worthless; losses for partial worthlessness cannot be claimed.
Where this becomes tricky, is in determining the year in which the stock became worthless. Keep in mind that this burden of proof is on the taxpayer.
Not receiving K-1's may be one factor, but probably not sufficient in of itself at this point.
You need to do more to support your position; (1) Did you write letters (sent certified mail return receipt requested) asking about your K-1, (2) Did you receive any correspondence from the company indicating that you would not receive any more K-1's and a reason as to why, (3) Have you had an attorney send any correspondence. (4) Have you notified the company that you are abandoning your interest, (4) Have you inquired with the company to purchase your interest.
All of the above are additional items that you should look into and follow-up on the ones that make sense to build your case for a worthless stock deduction.
Ok, I received a letter indicating the investment is worthless, no K-1 for 2019 and the letter
said no K-1 will be issued for 2020. How can I enter this in TurboTax? Via the tutorial, it only
seems to allow me to progress in this section if I indicate I received a K-1.... which I didn't.
Am I missing something or is this a bug (or better put, lack of an option) in the software?
Any help is greatly appreciated.