Deferred Compensation

[Zeus11]

I worked for a small startup.  I received no salary for two years, but had deferred compensation in my agreement, plus shares of the company.  The company is going bankrupt this year, and there will be no compensation paid.  As an individual taxpayer who got stiffed, so to speak, do I have a deduction in there somewhere?  The worthless stock would have no basis, so more concerned with the lack of salary and if that is a loss of some sort, or deduction, that I might take.

Regards, and thank you for your insight...

[Mike9241]

Sorry. since you had no income that you reported, there is no deduction available. even if minimum wage laws apply, there would be an issue of how to collect since the compnay is bankrupt.  maybe the exceutives but that would be a question for a labor lawyer.

[Opus 17 · Accepted solution]

You can't deduct something from your income that was never included in your income to begin with.   If wages were never paid, you never paid tax, so that's the tax reduction you get.

Depending on the amount of compensation owed, you may want to hire an attorney.  Although employees may be considered unsecured creditors, there may be state laws that require employees to be paid before other debts can be settled.  You may also be able to lay criminal or civil charges against the owners that would, at least, bar them from operating another business.

[Critter-3]

Same goes for the given stock ... you paid nothing for them and if you get nothing for them then you have no income or loss to be recognised.