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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12698
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Invested $90000 in a hospital that later filled for

Customer Question

invested $90000 in a hospital that later filled for bankruptcy. How can I claim this loss for this years tax.
JA: The Accountant will know how to help. Please tell me more, so we can help you best.
Customer: The hospital filled for bankruptcy in 2016.
JA: Is there anything else the Accountant should be aware of?
Customer: What do you mean?
Submitted: 6 months ago.
Category: Tax
Expert:  Lane replied 6 months ago.

Hi My name's Lane. I can help you here.

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If you can document that there is no possibility of ever getting your initial investment back OR any income, the this is a capital loss.

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If the hospital filed for liquidation bankruptcy, rather than reorganization, AND that you will receive no proceeds as a product OF the bankruptcy liquidation, you'll be able to take as a capital loss.

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Capital losses must first be netted against any capital gains

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  1. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.
  2. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.
  3. Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.
Expert:  Lane replied 6 months ago.

Please let me know if you have ANY questions at all, before rating me.

I hope you’ll rate me (using those stars, or faces on your screen, by clicking submit) based on thoroughness and accuracy, rather than any good news / bad news content.

Otherwise I’ll receive no compensation for the work here at all, from JustAnswer.

Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, to clients on three continents since 1986

Customer: replied 6 months ago.
Do one have to do anything with a schedule K-1?
Expert:  Lane replied 6 months ago.

Yes, the K-1 reports information from either a partnership or an S-Corp, and flows to different parts of your return.

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The k-1 is what passes operating gains, operating losses, capital gains, capital losses and other items to the partners (or S-Corp shareholders) from the business.

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Expert:  Lane replied 6 months ago.

Also, if this IS the hospital that filed for bankruptcy, the K-1 wouldn't show the 90,000 as a loss. The k-1 simply passes the results of the business operations to you t report on your tax return.

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The 90,000 loss would be in addition to and items of income or loss that came from the operations of the business, or from the business selling an asset it owned for a gain or a loss.

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One clue (if the K-1 IS from the hospital in question) that it's worthless would be the FINAL K-1 box being checked on the K-1.

Expert:  Lane replied 6 months ago.

AND no distribution in box 19.

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Did my answer help? Let me know if you need more here.

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If this HAS helped, I'd appreciate a positive rating using those stars on your screen.

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But again, if you want to discuss further, let me know.