Go to Jeff Salisbury LWGate Home Page.From: "Peter & Karen Diamond" <diamond@vsi.net>
Subject: Stock & Bankrupcy
Date: Mon, 12 Apr 1999 06:35:43 -0400
Next Article (by Date): Magic debt reduction BOB FORD
Previous Article (by Date): Re: "magic" debt reduction "L. Chen"
Articles sorted by: [Date]
[Author]
[Subject]
Scott, Just because the company is in Chapter 11 doesn't mean it is worthless. This is a tricky are because the IRS specifically wants you to write it off in the first year you believe it to be worthless. Sometimes, it may not be obvious right away that the stock is going to become worthless. A worthless stock is put on Schedule D with your basis and a sale price of 0 (zero). They are typically treated as being sold on 12/31 of the year of worthlessness. The loss is treated like any other capital loss. If you can eventually sell the stock after writing it off, you would treat that gain as if it had a basis of 0 (zero). The way I see it, this will not add to your total tax for the transaction. I had a stock go worthless in 1997 and the bankruptcy case is just ending. It depends on the situation, but individual shareholders are pretty far down on the list of creditors. So, unless you really believe the company is viable in the long term, the safest bet it to write it off as soon as possible, since you can always sell it and pay the proper tax later. Peter Diamond (I am not a tax professional and I don't know all the specifics of your situation.) - -
Next Article (by Date): Magic debt reduction BOB FORD
Previous Article (by Date): Re: "magic" debt reduction "L. Chen"
Articles sorted by: [Date]
[Author]
[Subject]