10yrs ago I invested in a condo development project abroad that failed, losing my entire investment. Is it too late to write it off as a capital loss?

[koji-bamba]

I have receipts of the payments made and could also get documents from my bank to back it up.  Would I need to provide any other information?

[Opus 17]

The most important piece of info is the date that the condo development became worthless.  That might be a bankruptcy or dissolution date, or date it was sold with insufficient funds to repay investors.  Or if the condo is still theoretically a going concern but unlikely to pay anything, you may not actually have a loss yet.

[koji-bamba]

Thanks for the quick response.  There was well publicized news that the project was being shut down in 2010.  The developers disappeared, stopped returning emails, and eventually got the dreaded MailerDaemon back in the end of 2011.

[Opus 17 · Accepted solution]

Depending on the legal circumstances, the investment was worthless either in 2010 or 2011. That was when you would need to report it on your tax return.  You can't amend 2010 or 2011 for a refund any longer, so there may be no way to recover any money.  (At this date, only 2013 or later can be amended for a refund.)

Again, depending on the circumstances, it might be argued that this was an investment loss, or a theft loss.  Theft losses are deducted against ordinary income in the year they occur and don't carry forward unless they are so large as to cause a net operating loss.  Then they carry back two years before carrying forward.  An investment loss is a schedule D capital loss that is deducted against other capital gains.  If you don't have any other capital gains, then you can deduct $3000 per year and carry the rest forward year to year.

So, if this was a very large loss, it is possible that there is something left to deduct now, but it would require filing amended returns for 2010 or 2011, and every year after that (and possibly 2 years before) to get all the losses documented and calculated and on the IRS books.  The IRS would only pay refunds due from 2013 or later, but you would have to file all the previous returns to get everything documented.  

For example, if you lost $20,000 as an investment, and have no other capital gains, you would have deductible $3000 losses for 2010, 2011, 2012, 2013, 2014, 2015, and $2000 for 2016.  All those amended returns would have to be filed (except 2016 which would be on your original return of course), and refunds would be payable for 2013 and later. This is going to require the help of an accountant I think, so if the loss was very large, and you think you have a carryover, you may want to consult one.  But be careful because if this was clearly a scam/theft, the casualty loss rules apply and the deduction is figured quite differently, and sending in so many amended returns is likely to raise questions so you will want to get it right.  It's also possible that you would not have to amend so many returns by instead attaching only amending 2013 and recent, by attaching a statement showing how you calculated the loss.  But that would also need the advice of an accountant, especially an enrolled agent.