Good follow-up response. Now for direction:
- You are only allowed to take a loss when the facts indicate that there is essentially no recovery possible. Having a copy of the bankruptcy notice should substantiate no further recovery.
- Based on the facts, you are a passive investor and the losses that passed through were disallowed as you did not have any other passive income to use the losses. I am assuming this from the facts. If this is not correct, please update.
- If bullet two is correct, then you are able to take losses up to the amount of capital you contributed; $10,000. Even though you have $4,000 in additional losses, you do not have any "at-risk" to take those losses. You can't take more losses than you were economically out of pocket. The $4,000 in losses will be lost.
- Bullet number 3 could change if you guaranteed any debt and are legally required to contribute additional funds. However, I assume this is not the case as a 1% shareholder.
- Sch D and form 8949 do not come into play. Your losses will be ordinary losses. As noted previously, since you have no remaining basis after taking the $10,000 in ordinary loss, there is neither capital gain or loss at this point.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
