Loss on the sale or dissolution of a business would be treated as a capital loss. However, if the loan was made to protect your job it may be classified as a business debt status is allowed if your dominant motive (not just a significant motive) for the loan, was to protect your job. Which motive is dominant is determined by several factors, including the amount of salary as compared to the amount of the investment and loans. If it can be classified as a business bad debt, it would receive ordinary income treatment.