Capital Gains and Losses

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I have invested in a risky private placement. I have heard…

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I have invested in a...
I have invested in a risky private placement. I have heard that IF the total capitalization is < 1,000,000 and the venture tanks, I can expense the loss rather than take the $3k/year loss against other income. Is this true? And what are the IRC references?
Submitted: 3 years ago.Category: Capital Gains and Losses
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Answered in 13 hours by:
5/25/2015
Tax Expert: TaxRobin, Tax Preparer replied 3 years ago
TaxRobin
TaxRobin, Tax Preparer
Category: Capital Gains and Losses
Satisfied Customers: 18,361
Experience: 15+ years in Tax preparartion as well as Instructor for tax law, theory, and application
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Hello and thank you for posting your question.
If your investment is a loss or becomes worthless it is a capital loss and is subject to the capital loss rules.
Section 1244 does allow for an ordinary loss on stock by the original owner. (a) General rule
In the case of an individual, a loss on section 1244 stock issued to such individual or to a partnership which would (but for this section) be treated as a loss from the sale or exchange of a capital asset shall, to the extent provided in this section, be treated as an ordinary loss.
For a privately held company, you must show that the company is dissolved or no longer operating.
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Tax Expert: TaxRobin, Tax Preparer replied 3 years ago
Please respond if you need clarification
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