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?

[ToddL99]

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]

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. 

[User826]

Thank you Mike9241!  I also had an LLC investment (K-1) that went bankrupt this year, but I still had a positive basis in the partnership.  Do your comments mean that I can't get a tax loss for it at all?  Or is there still some way to get some benefit out of this loss? 

[PatriciaV]

To report the loss on the dissolution of your investment, be sure to report this change in status when you enter Schedule K-1. 

1. On the page "Describe the Partnership," check the box for "This partnership ended in 2021."
2. In most cases, you would choose "Disposition was not via a sale."
3. Enter the purchase date and date of dissolution as the sale date.
4. Follow the interview to the end to enter the K-1 information, including any loss carryovers.

[User826]

Thank you that is very helpful