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Zero-Value Assets

Unfortunately, not all investments always go as planned. In the specific case that you have to declare a private equity, private lending, or other investment as worthless, you will need specific documentation to complete a zero-value distribution.

Zero-Value Assets and Distributions 

Below is everything you need to know about Zero-Value Assets and Distributions. Requests for zero-value distributions can be easily submitted via the NDTCO Portal at any time. 

What should I do if an asset is determined to be Zero-Value 

When an investment is determined to be of zero value, you need to have it removed from your self-directed account. You can easily submit a request to do so via the NDTCO Portal: 

  • On the Overview page, find the asset that needs to be declared as zero value. Click “Take Action” to the right of that asset and click on “Valuate.” 
  • On the “Fair Market Valuation Page,” check the box that states, “I would like to declare this asset is worth $0 and have it removed from my account.” 
  • Provide any additional information, upload supporting documentation as necessary, check the box to agree to “Terms and Conditions,” and click “Submit. 

What assets can be Zero-Value? 

Some investments, such as precious metals and real estate, are not eligible for zero-value distributions since they are incapable of losing their value. 

Private Equity and Debt/Promissory Notes Investments are examples or investments that can be Zero-Value 

Private Equity Assets: Documentation Requirements 

Acceptable Documents 

  • A letter from a CPA or Attorney 
  • A letter from a managing member on company letterhead 
  • Any official court documents, including bankruptcy or criminal filings 
     

Not Acceptable Documents 

  • Schedule K-1 

  • Documents from the Secretary of State website 

  • Newspaper or website clippings 
  • Non-authorized signers (i.e., the janitor or landlord) 
  • Electronic correspondences with the company (e-mail) 
  • Personal research 
  • Voicemails and text messages 

Debt/Promissory Note Investments: Documentation Requirements 

Acceptable Documents 

  • Death certificate if the borrower is deceased 
  • A signed letter from the borrower explaining why he/she are unable to pay 
  • Any official court documents, including bankruptcy or criminal filings or receivership documents 
  • Secretary of State information showing the borrowing entity is dissolved 

Please note that we cannot accept emails as proof of value. 

Will a Zero-Value Asset affect my taxes?  

NDTCO will distribute the asset to you valued at $1. The value is low enough that it will not be reported to the IRS.