Some of these companies went silent — no email, no K-1, nothing since 2022. Most of them didn’t. The founder is still around, still on LinkedIn, still perfectly friendly, and if you ask how it’s going you’ll hear “still exploring a few options” or “there’s some acquisition interest.” You heard it last year. You’ll hear it next year. Nobody is lying, exactly; nobody is going to say it’s over either, because saying so costs the founder something and costs you nothing.
This page is about that position: not dead, not alive, and nobody willing to call it. It explains why that is harder than silence for a loss claim, what each of the three paths asks of a founder who is still there, and what to bring to your advisor. (If the company actually went silent, start here instead.)
Why “exploring options” is worse than silence
A loss on a private position gets reported one of three ways: you establish that the position became worthless in a specific year, you abandon it, or you sell it. The first two turn on facts about the company. A silent company at least leaves those facts open. A founder who keeps answering closes them — in the wrong direction.
Every time the founder says “acquisition interest,” they are, in effect, telling you the position isn’t worthless. They may be right. They may half-believe it. Either way, it’s now on record: in an email, a text, a LinkedIn reply. And the two paths that depend on the company being finished now have to argue with the company’s own founder.
What each path asks of the founder
A worthlessness claim asks the founder for the thing they won’t give. Under §165(g), the position has to be wholly worthless — no value at all — in a year you can identify from an identifiable event. The cleanest evidence is a statement from the company: a dissolution, a final K-1 marked final, or a letter from the founder saying the shares are worth nothing. A founder who has told you the company has prospects is being asked to put the opposite in writing, on letterhead, about a value they don’t know and a tax position that isn’t theirs. Most decline. (Why, from their side.)
An abandonment asks the founder to process a surrender. Under Treas. Reg. §1.165-5(i), you permanently give up all rights in the position and receive nothing. The usual form is a written notice to the company. With a silent company, that notice goes to an address nobody checks. With a reachable founder, it lands on their desk: they’re the one who cancels the shares, amends the cap table and gets whatever consent the company’s documents require — once for you, and again for every investor who does the same. And you are now on record surrendering, for nothing, something the founder has said is worth something. The regulation says all the facts and circumstances determine whether that was an abandonment or something else, such as a gift or a contribution to capital. What the founder has said about the company’s prospects is one of those facts. The regulation also names stock and certain corporate debt; it doesn’t name SAFEs, and partnership and LLC interests fall under different rules.
A sale asks the founder for nothing. Under §1001, you transfer the position to a buyer for consideration on a stated date, and the loss is the difference between what you paid and what you received. No letter. No cancellation. No verdict on the company. The founder isn’t a party to the sale, isn’t asked whether the company is finished, and can keep exploring. If your purchase documents require the company’s consent to a transfer, that is a signature, not a statement about the company’s future.
| What the path needs from the founder | Worthlessness claim §165(g) | Abandonment §1.165-5(i) | A sale §1001 |
|---|---|---|---|
| A statement that it’s over | Yes — the letter they won’t write | No, but their “it has prospects” cuts against your surrender | No |
| An administrative act | No | Yes — receive the notice, cancel the shares, amend the cap table | No; a consent signature only if your documents require one |
| Compatible with the founder still “exploring” | No | Poorly | Yes |
What a sale through DivestMe is
A documented sale through DivestMe costs a flat $150 per position. DivestMe LLC is the buyer: it counter-signs the Asset Sale Agreement, takes the position outright, and delivers the executed agreement, a Certificate of Completion and a preparer record within minutes. The purchase price is nominal, $1.00, because a position with no market has no price to discover; the dollar is consideration, not a valuation, and it is what makes the transaction a sale rather than an abandonment.
Two things in the agreement matter for this case in particular. You are never asked to attest that the company is dead, dormant, or worthless — the agreement doesn’t contain that representation. And it says the opposite of what a worthlessness claim would require: the position may appreciate in value after the sale, including in the immediate future, and the seller has no share in that. If the founder turns out to be right, the buyer owns the result. That is what makes it a real sale, and it is why the founder’s optimism and your sale can both be true at once.
Whether the sale produces a deductible loss on your return, in what year, and in what character is your advisor’s determination. DivestMe documents the sale and does not decide eligibility.
What the founder is probably thinking
Formal closure is expensive — revival fees, back franchise tax, a wind-down package — and a company with nothing in the account can’t afford to die properly. The patents or the codebase might find a buyer. An acquihire might materialize. A pivot might still be in them. None of that has to be disclosed, and none of it has to be given up. The only thing the founder can’t give you is a date, and a sale is the one path that doesn’t need one. The founders guide says all of this from their side; it’s the page to hand them if the question ever comes up between you.
What your advisor will need
Gather these before the conversation:
- What you bought, and from whom: stock, preferred, SAFE, note, LLC or LP interest.
- Cost basis — what you actually paid, plus any later contributions.
- Acquisition date, and the subscription or SAFE document itself, including any transfer restrictions.
- Every communication from the company since, including the most recent “exploring options” — these are the facts that bear on a worthlessness claim, and your advisor will want to see them.
- Any K-1 or 1099 ever received, and the last year one arrived.
- Whether the stock might be §1244 small-business stock, which your advisor will check.
Timing
A sale counts for the year it closes. A sale signed on December 31 belongs to that year; one signed on January 1 belongs to the next. If you and your advisor decide a sale is the right path and you want it in the current year, the paperwork has to be complete before year-end — not started.