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vm79417
New Member

I invested 50K in a start up in 2016, the company filed for bankruptcy and dissolved with no return for investment in 2019 Nov. how do I claim this as tax credit?

 
2 Replies
ToddL99
Expert Alumni

I invested 50K in a start up in 2016, the company filed for bankruptcy and dissolved with no return for investment in 2019 Nov. how do I claim this as tax credit?

You can claim this as a loss on the sale/disposition of an investment, but only in the year when the investment became worthless (e.g. the year they filed bankruptcy).

 

See How do I deduct worthless stock? for instructions on how to make this entry.

 

It appears you would need to amend your 2019 return to do this. See How do I amend my 2019 return? for instructions.

 

 

Mike9241
Level 15

I invested 50K in a start up in 2016, the company filed for bankruptcy and dissolved with no return for investment in 2019 Nov. how do I claim this as tax credit?

what type of entity was the startup?  if a partnership or S-Corp you should have been getting a k-1 each year which likely would report ordinary losses reducing your taxable income and hence basis.   Only with a C-Corp would you be entitled to a capital loss in the year it went bankrupt.   For a partnership or S-Corp it's likely the losses wiped out your basis so there is no capital loss to report. 

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