I pledged collateral to secure a loan for the sale of my company

I sold my company in 7-2011 to some investors. So that the outstanding loan with my bank at the time of sale could be refinanced by the new company, the bank insisted that my collateral that had been pledged ($600k) remain pledged to secure the new note to the new company. This is written into the new loan agreements.

Long story short, the new owners made a mess and two years later defaulted on the note. The bank took the money out of my account as per the loan agreement and the company was shut down.

I have two tax issues as I see it? I will receive 1099's for the distributions from the account to the bank creating taxable income for the gains in the account.

Do I have any way of deducting the loss of my money for tax purposes?

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Ron
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