When a corporation's stock is sold or becomes worthless, an original stockholder can be treated as having an ordinary loss (fully tax deductible), instead of a capital loss, up to $50,000 ($100,000 if married filing jointly). Any loss in excess of this amount would be a capital loss, which would offset capital gains and then a maximum $3,000 per year would be deductible.
The maximum Ordinary Loss deduction is $100,000 for married individuals and $50,000 for unmarried.
To qualify, cash or property paid to the corporation in exchange for its first $1,000,000.00 of capital stock and the stock must have been issued to an individual stockholder (or their partnership) for money or other property but not stock or securities or services rendered.
