The two answers to date look solid, Adam Gering's advice to speak with the accountant, and Wray Rivesu00a0 (who is an accountant) pointing to the tax code section.My understanding is that if you can justify that a company in your investment portfolio is truly worthless, you can write it off even without a complete accounting, record, or formal dissolution of the portfolio company. Many companies fail this way, without formally going through bankruptcy or wind-down, so angels and VC funds probably have standard procedures to deal with it. As long as you file the right forms and the company stays dead, you should be okay. If the company comes back from the dead and actually returns on the investment, you would have a more difficult time justifying why you wrote it off in the interim. Please don't take this as a technical or correct answer from a tax perspective, just my general understanding of how the system works.