I invested in a company that got closed before going public. Can I declare this as a loss? if so, where? I don't have any 10XX form, just a letter of company dissolve..

[sagi-tiferet]

i got State of Delaware certificate of disslution

[RobertB4444]

You will enter this into TurboTax as though you had received a 1099-B form.  The 1099-B form that you would have received would have shown the name of the company, the date that you invested in the company, the amount that you gave them, the date that you sold your shares (which is the date the company went completely bankrupt and you were certain that you could not recover your investment), and the amount that you sold them for (that is zero).

This will show a capital loss that you can use against other capital income.  Or you can use it against regular income at a rate of $3000 every year until it is used up.

Make certain to maintain all documentation related to your investment and the end of the company in order to prove this all to the IRS if they ask.

@sagi-tiferet 

[sagi-tiferet]

Thanks Robert!
just so I understand correctly, the name of the company I invested in goes into the "Bank or brokerage", right?
I did not receive any 1099-B from them - but I do have a certificate of buying shares, and the dissolution of the company...
Can you please help me understand - if the stocks are "gone" - (sold value 0), is that "long-term did not recive 1099B-from"?
Also, I don't see anywhere where I can put the value of the shares I lost... box 1A ask for "6000 shares of company name"... I don't see anywhere a place to write down the value it cost me...
(I assume Box 1d - proceeds is where you said I need to put 0$... still not sure where to put my losses in $...)

Also, if I invested 15000$, what reasons should I have to break it into 5 X 3000 (3000$ for 5 years) rather once of the 15000?

Thanks in advance!

Sagi

[JamesG1]

Yes, the name of the company invested goes into the Bank or brokerage.  Then you are making the entry using the One by one method.

You did not receive a 1099-B form.  Select noncovered.  Long-term applies if you owned the investment more than one year.

Enter the cost basis of the investment in Box 1e - Cost or other basis.

Box 1d - Proceeds will be $0.

You may enter the total investment of $15,000 and not 'break it' into 5 X $3,000.

An individual taxpayer with a net capital loss may deduct up to $3,000 per year against ordinary income.  

So if you are reporting $5,000 in other capital gains, the $15,000 loss will offset the $5,000.  Of the remaining $10,000, only $3,000 may deducted against ordinary income. The balance of $7,000 will carryforward to subsequent years.  See also here.

[sagi-tiferet]

Thanks guys!
one last question (i think/hope...)
My taxable gains (besides salary) are INT, or DEV, not even close to the 15K i lost...
If I declare the 15K lost on 2024 form, will it carry over to next years declarations too?
(lets say I gain 2K every year - will declaring now 15K will automatically offset the gain in the next 7-8 years, or that is the meaning of "breaking it up, up to 3K a year" - and each year I'll declare enough to offset that year gains back to 0? Is there an up-side to declare now the whole 15K this year, even if I didn't had capital gain as 15K?)

thanks!

[SusanY1]

You need to report the loss in the year that it happened.  Your loss will offset any gains that you have this year, and then an additional $3,000 ($1,500 if married filing separately) will be used to reduce your other income. 

The remaining balance will be carried into the next year where it will be used to first reduce any capital gains and then, again, any remaining amount up to $3,000 will reduce your taxable income.  

Note that the $3,000 will be removed from your carryover amounts even if it does not yield any benefit to you. 

There's no limit on number of questions, so if you can continue to ask more as they come up!