I invested $60K in a startup LLC in July 2020 and it filed Chapter 11 bankruptcy in January 2024. They incurred losses each year – ($6727) in 2020, ($6505) in 2021, and ($2884) in 2022. They said they will not issue the 2023 K-1 nor the “Final K-1” for 2024 (please don’t respond saying they have to, because they won’t – the company is dissolved and won’t spend the money). Additionally, I was misinformed about passive carryover losses and did not check the appropriate box in 2021 and 2022 stating “I have passive activity losses carried over from last year".
- Is it necessary to amend my 2021 and 2022 tax returns to capture the passive activity losses if I am going to have to write off the full $60K due to bankruptcy anyway? Also, I cannot finish my carryovers anyway since I will not have the final two years of K-1s.
- How do I handle my 2023 tax return if no K-1 received? I do not have the numbers to continue calculating my basis nor enter the passive carryover losses. I also cannot check the box that the company dissolved as it did NOT dissolve in 2023. Do I just file my tax return without a K-1?
- How do I enter the investment loss on my upcoming 2024 return with no “Final K-1”? I am walking through the 2023 wizard steps just to see what to expect next year. I see there is a box that should say “This partnership ended in 2024.” Once I check that box, it looks like I then check “Disposition was not via a sale” on the next screen. Then when proceed to next screen it asks for the purchase date and sale date. There was no sale per my previous response, so I suppose I enter the bankruptcy filing date? Then, when I keep going through the wizard it starts asking me K-1 questions – Box 1 Ordinary Loss for the year, then “what boxes are checked on your K-1”, etc. There is never a spot to say I didn’t get a K-1 and I will not be getting one. Surely there is an alternative way to file this investment loss and be done with it.
I would be so very appreciative if you could number your answers to coordinate with the questions. I know it is a lot and I am trying to keep it easy to follow.
@PatriciaV& @RSUMan - hoping you can weigh in here as you have both helped me with my K-1 issues and provided knowledgable answers that stand out from the crowd. I would be so grateful for your help.
