I invested $500 in a business via Wefunder. The business failed. I would like to deduct the investment. I do not have a form to enter on TurboTax. How do I enter it?

[Mike9241]

assuming you deducted no losses, your basis is $500 and you have a $500 capital loss - short-term or long-term depending on how long you held the stock before the company failed.   should the IRS challenge the loss deduction, since you have no supporting paperwork, it could deny the deduction. 

[DianeW777 · Accepted solution]

It depends. You must have some type of documentation showing the fund is completely done without the possibility of recovery of your funds.  If you have that you can enter the investment as a loss by using zero selling price with date acquired and a sale date on the day it was completely worthless. 

• Long term is a holding period of more than one year (one year plus one day) and receives capital gain tax treatment (0%, 10%, 15%, 20% depending on your regular rate of tax)
• Short term is a holding period of one year or less and receives ordinary gain tax treatment (your regular rate)

Use the instructions here to enter your loss with the details above.

To enter your sale in TurboTax, follow these steps. Click this link for more information. Where do I enter Investment Sales?

1. Open or continue your return.
2. Navigate to the investment sales section:
   • TurboTax Online/Mobile: Go to investment sales. If using this application, make sure it is open
   • TurboTax Desktop: Search for investment sales and then select the Jump to link. 
     • Or Personal Tab > Continue > I'll choose what I work on > Scroll to Investment Income > Select Stocks, Cryptocurrency, Mutual Funds, Bonds, Other
3. Answer Yes to the question Did you sell any of these investments in 2024? (or Okay! to Time to kickoff your investments!).
   • If you land on  the Investment sales summary or Your investments and savings screen, select Add More Sales or Add investments.

• @jenniferkurek