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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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I invested 25,000 in venture capital in 1995. I was issued

Customer Question

I invested 25,000 in venture capital in 1995. I was issued 80,000 shares of common stock. The company filed chapter 11 and I waited the required time for them to reorganize. I was told by the company the stock was worthless, which I have a hard time believing since they are still in business. I would like to know what options I have to either recoup my money or take a tax loss. The investment was in an IRA, which has subsequently been closed.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.

Hi. My name is ***** ***** I will be happy to help you.

If all your funds in your IRA were pre-tax, meaning you deducted the contributions on your tax return, you will not be able to take the loss. You can only claim loss if you lost money that had already been taxed.

Sorry if this is not the answer you were hoping for.

Expert:  emc011075 replied 1 year ago.

Investments in your retirement accounts (401K, IRA) are not treated the same way as your personal investments. When you use your money from your savings, invest it and loose it, you can claim claim capital losses. However this tax treatment is not applicable to retirement accounts.

Let me know if you have any questions.

Customer: replied 1 year ago.
Since I can't take a loss, How would I go about recouping my money?
Expert:  emc011075 replied 1 year ago.

You cannot deduct it on your tax return so your other options would be legal actions or maybe lawsuite. I am sure you are not alone who lost their retirement savings invested with the company and maybe there's already a pending lawsuit against the company. I am not a lawyer to advice you what would be the best legal action in your case.