You do need to report all of your stock sales even the ones that have no gain or loss. The IRS doesn't always know whether there is a gain or loss unless you tell them.
If it was an investment in a C-Corp then there is no K-1. C-Corps don't issue them. So you would just report the loss as a sale of stock in the C-corp where he paid $1000 for the shares and sold them for zero dollars.
@mrh84
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