Where do I enter investment loss?

[rls85]

I invested about $60,000 in a friend's restaurant in 2017, but the restaurant completely went out of business in 2019. I did not receive any income whatsoever from this investment, so I lost my entire $60,000. How would I enter this information on my 2019 taxes? I did not receive any tax forms reporting this loss.

[VictoriaD75]

Were you an owner in the business in exchange for your investment? Were you receiving a K-1 or any similar tax form in prior tax years? 

[rls85]

I wasn't an owner, and didn't receive any tax forms at any point. I just held informal shares we called "subscription units" entitling me to a percentage of annual profits. But they never turned a profit, so I never received any income.

I think I see it under Investment Income > Stocks, Mutual Funds, Bonds, Other. Is that correct?

There wasn't a "sale" of my shares per se, as the business just went under. Would I simply enter $0 under "Proceeds", and $60,000 under "Cost basis"?

Thank you

[VictoriaD75]

Yes. You have it. This is considered a Nonbusiness Bad Debt. Even though this was related to a business transaction, you were not the business owner. The transaction will be reported on Form 8949 and summarized on Schedule D. You can only deduct up to $3,000 of losses against earned income each year. You will carry the losses forward until used in full through offsetting future gains or the $3,000 per year deduction. You can see more information in the link below:

Bad Debt Deduction