You cannot take the loss as you don't have that amount of money "at risk" in the company.
You are correct when you state that you did not gain or lose anything on the investment. The "At Risk" rules limit your overall deduction to not more that what you have "at risk" in the venture.
What you have at risk is your contribution of $2,500, plus the income credited to you of $500, less the distribution of $2,500 and $500 of the loss. The other $500 loss reported on your k-1 schedule in 2020 is not deductible, since you don't have money at risk left over to absorb it.
If the company had earned $500 instead of losing that amount, you would have an additional $500 of basis in the company, that you could write off as a capital loss when you disposed of your interest in the company, thus balancing out the operating income you reported on your tax return.
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