[Maish]

Can anyone who knows tax laws advise me about claiming a total stock loss due to the dissolution of the company? I bought the stock many years ago and lost track of it. Thanks in advance.

[Koapaka]

Originally Posted by Maish

Can anyone who knows tax laws advise me about claiming a total stock loss due to the dissolution of the company? I bought the stock many years ago and lost track of it. Thanks in advance.

We can tell you anything you might want to hear on a website, but I would personally consult a tax attorney or expert to ensure you get all the loss advantage you can legally claim. Just my 2 cents....

[retiredguy123]

You can claim a long term capital loss, but you need to know how much you paid for the stock.

[blueash]

Losses (Homes, Stocks, Other Property) 1 | Internal Revenue Service

[davem4616]

any professional tax preparer will have the answer...there's plenty of them out there that are current on the tax laws for 2021 reporting

like lawyers at a cocktail party, they're generally not going to give you free advice (unless you have a history of working with them)...so you may want to wait until you engage one to actually do your tax return

[Babubhat]

Please get professional paid advice. Cite codes and regulations. Otherwise caveat emptor. The IRS is not interested in hearing you relied on a bulletin board

[Gpsma]

This is a simple tax question. No need for “professional” advice...google will give u the answer.

Simple answer...an investment that is worthless is deductible.

[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

[DAVES]

Originally Posted by Maish

Can anyone who knows tax laws advise me about claiming a total stock loss due to the dissolution of the company? I bought the stock many years ago and lost track of it. Thanks in advance.

You need to establish what the loss was. "I bought the stock many years ago and lost track of it." Part of being a corporation is they need to send shareholders statements. Dissolution of the company,somehow you were notified, I assume a letter from an attorney. Perhaps, they can help you with number of shares you own, owned and when you bought them, perhaps even your cost. Obviously get it is writing. Typically, what happens is the principals take whatever they can out of the dead or dying company. The attorneys get their fee and the shareholders get nothing.

The HOW MUCH is an important question. Florida has no state tax. If, your top federal tax is 30% and you invested say $100 on a hot tip from a friend, You have to prove it. You could deduct $30. It may not be worth the trouble OR THE RISK OF IT TRIGGERING AN AUDIT.

[La lamy]

Whoa, this reminds me that I didn't claim anything when my Nortel stocks went kaput. It was during the dot com crash and I wasn't in control of my portfolio at that point. Such a shame when people you trust turn out to be so incompetent. My broker sold all his Nortel stocks when they were going down but didn't do anything with mine. So glad I've educated myself about the market and do things myself now.

[spinner1001]

Originally Posted by Maish

Can anyone who knows tax laws advise me about claiming a total stock loss due to the dissolution of the company? I bought the stock many years ago and lost track of it. Thanks in advance.

Google on ‘capital loss 1040’

[spinner1001]

Originally Posted by Gpsma

This is a simple tax question. No need for “professional” advice...google will give u the answer.

Simple answer...an investment that is worthless is deductible.

Not so simple. Capital losses on a form 1040 may be limited to $3000 per year and a carryforward.

[noslices1]

Originally Posted by Maish

Can anyone who knows tax laws advise me about claiming a total stock loss due to the dissolution of the company? I bought the stock many years ago and lost track of it. Thanks in advance.

Probably a Tax Attorney.

[retiredguy123]

Originally Posted by spinner1001

Not so simple. Capital losses on a form 1040 may be limited to $3000 per year and a carryforward.

True, but TurboTax would handle that automatically.

[Jhnidy]

Originally Posted by 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

Why wait the 40 days? A gain does not have a wash provision.