You would enter this as an investment loss. Only the amount that you invested is to be included. You cannot enter the interest as it was never included in your income.
You would enter the loss by selecting the following:
- Federal
- Income
- Show More next to Investment Income
- Start next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
- Select Other
- Continue through and select other for the type of investment
- Answer how you obtained it (purchased it)
- You will need to enter the selling price ($0 since you are not getting anything out of it), dates and the cost basis (loan amount)
Note, your navigation sequence may be slightly different. You can also use the Jump to feature by entering investment sale in the search bar at the top of the screen.
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