Canceled shares

[JDS41]

I invested in a start up company in 2010. On 3 occasions  I purchased convertible notes that were converted to preferred shares.  The company was purchased and merged with a LLC and has a result all common and preferred shares were canceled.  I did not receive shares in the new company.  My investment is now worthless.  How do I treat it on my taxes.

[RobertB4444]

You have made an investment that has become worthless.  You treat it the same as though it had been sold for zero dollars.  Be sure that the investment is absolutely worthless and maintain your proof of that in case there is ever any question.  

Enter it the same way that you would enter any other investment sale.  You will enter the amount that you paid for the shares as your basis in the company (maintain proof of that as well).  Enter the date that you became certain that the shares were worthless as the date of the sale and enter zero for the sale price.

@JDS41