[CoachKandSportsguy]

so there are four items you need to have

Date of purchase/Investment
$ Amount of purchase

Date of bankruptcy / dissolution / cease of operations
Value of Investment = Zero Dollars

If the investment was a long time ago, the IRS will not quibble over the date
just get the date as close to correct as possible. If you have a check great, if not, I would not stress about it.

Third, date of bankruptcy, write off as unsellable, get some documentation for that. . .

So you just put that into your tax return, assuming you use a program,
and you will be allowed to write it off against all long term gains taken last year,
and then an additional $3000 per year against income. . . .

So now the question is, how do you use the loss to offset long term gains if you don't have any at the moment?
If you have any taxable investments with substantial long term gains, sell them this year, like now, to lock in the current appreciation at no taxes owed.

If you can match the amount of long term gains against the loss, then you will have no taxes owed on the long term holdings. . .

OK, so now what to do with the cash from the sale of appreciated investments?
wait at least 30 days, and preferably more, say 40 days, and then buy back the shares
or invest in something else with a better outlook

If you buy back the original investments, your new tax basis for future long term gains
with be much higher, and therefore less taxes are owed when you sell them again in the future.

Example. . .

Taxable loss 10,000 from bankruptcy

Long term stock which has appreciated:
Bought Disney 100 shares in 2004 at $50, = $5,000
Sold 100 shares in 2021 for $150 for $15,000 and a resulting 10,000 long term gains

2021 Tax Return
Sold Disney at $10,000 gain
Write off bankruptcy of $10,000 loss

Long term capital gain = 0, no taxes owed

In February, Buy back 100 shares Disney at $160. . .

lost gain of $1,000
taxable basis gain $110 for no taxes paid. . .
saved $2-3,000 in taxes owed for the future sale of stock

Winner Winner, chicken dinner. . .

However, if you have this opportunity, you have to sell appreciated stock this calendar year to match the gain with the loss,
so act quickly to get whatever you need to execute this strategy, accountant, tax lawyer, whomever, because you don't
have much time left. . .

Am I a licensed accountant? no, Have I been preparing tax returns more complex that this, and trusts, estates, etc? yes, with colleagues who are licensed tax preparers and we chat alot about tax strategies. . . to keep the most amount of money. . .


true finance guy and sometimes tax guy