was your 2016 return extended? if not the date for filing an amended return to claim the loss in that year has passed. It needed to be filed by 4/15/2020. this brings up the issue that if you can't file an amended return for 2016 can you claim losses in 2017 and forward. also did the LLC ever report any losses or income that would affect the deductible amount. losses shown on the K-1 that should have been reported reduce the $40K while any income that was reported increases the $40K. I would suggest use of a pro.