investment startup loss

[taxgirl]

Client made a lot in crypto transaction in 2021 so is searching for losses. Invested in a startup company "years ago" which is "dormant" and wants to take a loss ($12,500). The company never took off. What documentation should he have besides something showing the original investment?

[TaxGuyBill]

Invested in a startup company

What does "invested" mean? Did he provide a loan? Did he purchase stock? Did he purchase a Partnership Interest? Something else?

[Snaggletooth]

Additionally, most expenses are limited to $5000 in a start-up year, with the remainder being amortized over a period of time. If I am correct, this will deflate the strategy.

[taxgirl]

He invested, gave money. Not a loan, no stock, no partnership interest

[New York Enrolled Agent]

He invested, gave money. Not a loan, no stock, no partnership interest

Invested in a startup company "years ago" which is "dormant" and wants to take a loss ($12,500)

You need evidence - documents which show the investment and so on. What documents does he have in his possession? Being "dormant" is not enough to establish the loss. Is the startup bankrupt?

You need to take a hard look at this. He just gave money???? Not a loan, no stock, no partnership interest

[Lion]

Was it a gift?

[TaxGuyBill]

He invested, gave money. Not a loan, no stock, no partnership interest

That doesn't make sense.

"Invested" indicates he expected some type of return, which implies it was a loan or some type of ownership interest in the company.

So you need to find out exactly what the transaction was.

If it was merely a "gift" (no expectation of anything returned), that is not an "investment".