I heard that the underlying investment went out of business or is shutting down. Why is there no loss on my K-1?

US Tax rules dictate that investments can be written off when an investment has become entirely worthless. This is a different standard than when an investment may be written down for financial accounting purposes.

The wind-down process can sometimes last many months. In these cases, the formal tax write off may occur substantially after a company first announces that it is shutting down.

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