I invested time in a tech start-up during 2013 that has since closed its doors.

I received payment in the form of convertible notes... $30,000 in total, which of course have no value now.

Is there any sort of tax write-off I'm able to take from this?

  • It would help to know what country you're at. Tax law differs from place to place. – littleadv Mar 31 '14 at 0:10
  • I'm in the US.. good question :) – Matt H. Mar 31 '14 at 0:14

In the US, you can deduct this as a "bad debt".

Since it's an investment, it is a personal bad debt, and as such it has to be totally unrecoverable. Personal bad debts are deducted as short term capital losses using form 8949.

See more information, and links to the relevant forms and instructions, here on the IRS site.

I missed a crucial word in your question... You invested time, and received notes in return for the time invested, not cash.

You can only deduct bad debt if you invested cash, or paid taxes on the notes when you received them. If you didn't pay taxes on the notes when you received them, then the debt is not deductible.

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