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Investment in Private Company (A Restaurant) - Losses, deductions, tax benefits etc

Hi,

I am an investor in a restaurant and with this quarantine situation I was thinking there is a chance that the restaurant does not survive an extended lockdown.  This is my only K-1, I have no other passive income (or loss).  Lets say I invested $50,000 back in 2015 - if the restaurant fails in calendar year 2020 and the value goes to $0...

 

1) How do I report that loss on my taxes?

2) Do I get a tax benefit somewhere for the $50,000 loss?

 

*I know my capital account is a bit less than 50,000 after some passive losses over the years but is still roughly $50,000*

 

Thank you!

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2 Replies

Investment in Private Company (A Restaurant) - Losses, deductions, tax benefits etc

When you enter the "Final" K-1, the program will walk you through it.

 

It is a capital loss.  Similar to if you bought stock for $50,000 and sold it for $0.  You would show a $50,000 capital loss.

JohnB5677
Expert Alumni

Investment in Private Company (A Restaurant) - Losses, deductions, tax benefits etc

AmeliesUncle stated that correctly.  This will not be reported until next year.  Hopefully with the assistance that's available you will be able to survive.

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