Can I write of investments in failed companies?

Q: I invested $20,000 in a private company 3 years ago and it just closed down. Can I write this off? -- Anonymous

The following answer was provided by Wesley Rickard CPA, Quin, Rickard, Lipshires, & Grupp LLP, Norwood.

A: You may write off the investment as a long term capital loss in the year it became worthless. You need to determine the date of worthless. This loss of $20,000 can offset you other capital gains and to the extent you have excess capital losses you may use up to $3000 against other income.