Question

Can I claim principal and compounded interest loss on an investment?

Forum|Forum|5 years ago
October 12, 2020
2 replies
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Can I claim compounded interest loss as well as my principal loss on an investment?

TurboTax Online

A

Anonymous

not sure. has the investment become worthless or have you sold it. if neither and it's just a market value decline, no current loss is available. if you haven't reported the interest as income you have no deduction.even if you have if it's something like on a zero-coupon bond the same rules would apply no deduction until investment becomes worthless or you dell it. the interest discount accrued would be added to the cost of investment.

S

seedavelee-gmailAuthor

It was sold and the capital loss was severe returning .13 cents on my original investment of $100k . Over the course of 13 years I reinvested my interest rather than receiving it as passive income (have documentation of this). With this it more than doubled my original investment. I know I can claim my principal investment of $100 k less the $13k (income when it was sold) yet what about all this compounded interest over the years, hence my question.

Thanks in advance for answering this!

A

Anonymous

that reinvested income was supposed to be reported as income each year. if you didn't you have no basis - no basis no deduction.

Carl11_2

Employee

No, not if you didn't pay taxes on it before. You can not claim a tax deduction for income never received, or for income you never paid taxes on in the past.

S

seedavelee-gmailAuthor

Thank you for your response. This helps, I understand. One last question if I may: I have a number of K-1's and 6 or 7 of them report a very small amount of capital income....like a dollar or 2, some show a small loss. It's 15 minutes of work for me to enter these into Turbo Tax and for what? It doesn't affect my taxes...just time spent entering this information (tempted to not enter them). The IRS also receives these K-1's and by not entering them "could" this draw attention to my return (electronic red flag) possibly causing an audit? I don't have anything to hide, yet prefer not to go through this.

Again, thank you for answering this!!