I tried to purchased an existing company in 2023 and after 4 month the company went out of business because the landlord had given eviction before i bought i lost 16k

[shelives-monalisa]

I have to take the owner to court. How can i report the loss?

[Mike9241]

as of now, there would seem to be no deduction because you are suing the owner to recover some or all of your money. this means that you don't know if you'll actually lose anything.  so the loss is only potential or in the eyes of the IRS contingent. the IRS does allow a deduction for contingent losses. 

[shelives-monalisa]

The case has already been resolved i was repaid but took a loss of 16k from the total given.

[KeshaH]

The way that you would report this loss depends on how far along in the purchase process you were and what specifically the $16,000 was spent on.

If you completed the purchase of the business before it failed and these expenses were normal, you'd report this as a loss on Schedule C.

However, it sounds like this was during the investigation/purchase process (sometimes called "due diligence"). If so, these expenses would typically be considered capital losses. You can report this on Schedule D as a capital loss.

You'll need documentation showing the $16,000 in expenses. If you have any capital gains, you can offset them with this capital loss. If you don't have any capital gains, you will only be able to deduct $3,000 per year until the loss is fully utilized.