Enron stock - is it worthless yet?

[Cathy]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

Thanks
Cathy H. in Kansas

 

[Herb Smith]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

See the following URL, and question 9 in particular.

http://www.enron.com/corp/pressroom/chapter11faq.html

 

[Phoebe Roberts, EA]

I have a few clients that had some basis in Enron stock when the
company went bankrupt years ago, but I've not seen any guidance that
this stock has been declared "worthless".

http://www.enronerisa.com/pdf/StockHoldersQA20041119.pdf
Enron stock was canceled on November 17, 2004, when the
company went into bankruptcy. Common stockholders got
shares of the Common Equity Trust, which will terminate no
later than 3 years (6 years if extended by the bankruptcy
court) from the date the bankruptcy plan was confirmed.

So I vote worthless at the point the Common Equity Trust
terminates (or worth something if you can turn in your stock
certificate for cash at the termination). It looks like a
number of columnists considered it worthless in 2004, but I
think it wasn't actually worthless then.

Phoebe

 

[D.F. Manno]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

This document may be of interest:

<http://www.enronerisa.com/pdf/StockHoldersQA20041119.pdf>

 

[A.G. Kalman]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

Enron stock was officially canceled in November of 2004. At
that time, Enron stated that they did not expect any former
holder of the stock to ever receive a distribution.

With the cancellation of the stock and the statement from
the company, the stock would have been considered worthless
by year-end 2004 and you should have taken your loss in
2004. (You can still amend 2004 to get a refund.)

As there were never any distributions to former holders, the
statement made in 2004 is evidence that the stock was
worthless in 2004 and that should satisfy the IRS.

It is possible, that you do not want to show the loss in
2004, but would prefer to show the loss in a later tax year.
In order to do that, you would need to produce evidence
that a market still existed in a later year.

 

[Andrew]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

http://www.kiplinger.com/columns/ask/archive/2005/q0526.htm

 

[cpabakem01]

Does anyone have any guidance regarding writing off the
seemingly worthless Enron stock? I have a few clients that
had some basis in Enron stock when the company went bankrupt
years ago, but I've not seen any guidance that this stock
has been declared "worthless". Can anyone shed any light on
this? Or, alternatively, does anyone know if a market
exists for this stock? I am referring to common stock.

Kiplinger May 26, 2005
Enron stock was officially canceled on November 17, 2004,
when the company went into bankruptcy. On its Web site, the
company states that "we do not expect that distributions
will ever be made to the former holders of Enron Corp.
stock." That should be enough to satisfy the IRS.

To claim the stock loss, report it on Schedule D as if you
had sold it for $0 on December 31, 2004 (write "worthless"
in the section where you are asked for the sale date and
selling price). Your loss is the amount you paid for the
stock.

You must file your loss for the year in which the stock
became worthless. So unless you took an extension on filing
your 2004 tax return, you'll need to file an amended return
1040x.

Milt Baker CPA