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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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I was a limited partner in a business. It went bankrupt in

Customer Question

I was a limited partner in a business. It went bankrupt in 2011. My investment is totally lost. How do I claim the loss on taxes? To what extent is the a deduction? I have been told that the entire amount is deductable, but going thru Turbo Tax, I cannot find a clear way to do this.
Submitted: 5 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 5 years ago.
Hello, THANK YOU for choosing Just Answer. My goal is to help make your life...a little...LESS taxing.

The loss is deducted beginning in the year that there is no reasonable expectation of repayment.

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Q: To what extent is the a deduction?

A: You can deduct the entire amount of the loss as a capital loss, but only $3,000 per year is allowed as a capital loss deduction. The remaining amount of the loss is carried forward to future years until exhausted.

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Q: How do I claim the loss on taxes?

A: You would use the Schedule D to record the loss.

Link to Schedule D:
http://www.irs.gov/pub/irs-pdf/f1040sd.pdf

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Record on Schedule D the date of the investment and the date that the business investment became uncollectible.

Place a zero or the amount of any partial recovery of investment capital on Schedule D in the column for "Sales price."

Enter the total amount of the investment capital on Schedule D in the column for "Cost or other basis."

Calculate the loss and enter as a negative number on Schedule D in the column for "Gain or (loss)."

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Please let me know if I can be of further assistance to you regarding this matter.

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Expert:  Tax.appeal.168 replied 5 years ago.
Hello again,

Clarification, please note that the remaining basis in the partnership investment after deducting for the prior year losses of the partnership will be the amount remaining to be claimed as a capital loss.