worthless stock


M

martin lynch

Hi I have two questions:

1) I held a stock with total value of $2.00. I sold the "worthless"
stock in order to take the loss for a tax writeoff. As silly as it
sounds, after paying my $5.00 commision, I actually ended up having a
net proceed of negative $3. Would I report my proceeds as negative
$3.00 on my tax forms, or should I just say I sold it for zero?


2) I held another stock, which got pulled off the major exchanges,
then went on the BB or OTC. After more time, the stock then
disappeared from my account holdings. If my broker does not report a
sale of this stock on my 1099, am I to assume the stock still exists,
but just isn't active on any exchanges?
 
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A

Arthur Kamlet

Hi I have two questions:

1) I held a stock with total value of $2.00. I sold the "worthless"
stock in order to take the loss for a tax writeoff. As silly as it
sounds, after paying my $5.00 commision, I actually ended up having a
net proceed of negative $3. Would I report my proceeds as negative
$3.00 on my tax forms, or should I just say I sold it for zero?

Report the sale for $2, assuming the broker does the same on his 1099B.

Then add the costs of sale ($3) to the cost basis.

And fire your broker. Every broker I;ve dealt with would charge 1 cent or
so to sell worhtless stock.



2) I held another stock, which got pulled off the major exchanges,
then went on the BB or OTC. After more time, the stock then
disappeared from my account holdings. If my broker does not report a
sale of this stock on my 1099, am I to assume the stock still exists,
but just isn't active on any exchanges?

If you can get a letter from the broker stating the stock is completely
worthless and it is his belief and his company's belief it will never
have value, I would assume it is worthless.
 
B

Bill

(e-mail address removed) (Arthur Kamlet) posted:
<[email protected]
u13g2000yqg.googlegroups.com>, martin
Report the sale for $2, assuming the broker
does the same on his 1099B.
Then add the costs of sale ($3) to the cost
basis.
And fire your broker. Every broker I;ve dealt
with would charge 1 cent or so to sell
worhtless stock.
[Remainder omitted]
Wouldn't the cost of sale remain $5, since that is what the broker
charged? Presuming the stock has fallen to a value of $2, and it's
original cost basis was substantially higher, there would seem to be no
reason to deny the additional loss represented by the $2 "negative
income."

I agree entirely that you should fire your broker. My brokers always
charge nothing for a sale of stock in order to establish a loss --
especially if it was bought through the same broker.

Bill
 
A

Arthur Kamlet

(e-mail address removed) (Arthur Kamlet) posted:
<[email protected]
u13g2000yqg.googlegroups.com>, martin
Report the sale for $2, assuming the broker
does the same on his 1099B.
Then add the costs of sale ($3) to the cost
basis.
And fire your broker. Every broker I;ve dealt
with would charge 1 cent or so to sell
worhtless stock.
[Remainder omitted]
Wouldn't the cost of sale remain $5, since that is what the broker
charged? Presuming the stock has fallen to a value of $2, and it's
original cost basis was substantially higher, there would seem to be no
reason to deny the additional loss represented by the $2 "negative
income."

I agree entirely that you should fire your broker. My brokers always
charge nothing for a sale of stock in order to establish a loss --
especially if it was bought through the same broker.

The issue we are concerned about is using a negative sales price
on schedule D. Don't do that, Increase basis by costs
of sale, instead.
 
R

removeps-groups

1) I held a stock with total value of $2.00. I sold the "worthless"
stock in order to take the loss for a tax writeoff. As silly as it
sounds, after paying my $5.00 commision, I actually ended up having a
net proceed of negative $3. Would I report my proceeds as negative
$3.00 on my tax forms, or should I just say I sold it for zero?
What does the 1099-B say is the proceeds? If the proceeds are $0,
just add $3 to the cost basis.
 
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H

honda.lioness

[email protected] (Arthur Kamlet) said:
The issue we are concerned about is using a negative sales price
on schedule D. Don't do that, Increase basis by costs
of sale, instead.
I questioned this because, for one, the Sch D instructions say that
those receiveing a 1099-B showing a net sales price are supposed to
report it on Sch. D, col d. For another, I find nothing prohibiting
reporting a negative number in col d.

For optimal communications and understanding, what folks read here
should be as consistent as possible with what they read in official
IRS publications.
 
L

lotax

For optimal communications and understanding, what folks read here
should be as consistent as possible with what they read in official
IRS publications.
Whoa whoa whoa!! I come here because I *want* to hears the answers
that I *can't* find in the IRS pubs! And the discussions of how
literally - or not - we need to abide by the "official" answers in the
IRS pubs. Illustrative specifics abound hereabouts of divergent
professional opinions...!!!

Please don't suggest that our answers have to hew tightly to the
gummint story - after all, I can find that story and fall into step
with it without any effort at all. When I come to this [and other]
message board(s), I have to know the players and judge their attempts
to express themselves and compare their insight to what I [may]
already know ... and ... and ...
 
M

Mark Bole

(e-mail address removed) (Arthur Kamlet) wrote:

I questioned this because, for one, the Sch D instructions say that
those receiveing a 1099-B showing a net sales price are supposed to
report it on Sch. D, col d. For another, I find nothing prohibiting
reporting a negative number in col d.

For optimal communications and understanding, what folks read here
should be as consistent as possible with what they read in official
IRS publications.
To the specific case of the OP, where did anyone ever say he got a
1099-B showing negative net sales price? To avoid the AUR (Automated
Under Reporter of the IRS), you want to match the 1099-B amount in the
sales proceeds column of Schedule D.

I agree with Lotax. The IRS can be amazingly reticent on issues that
have not been decided in court (and even those that have). Why should
they "go out on a limb" if they don't have to?

The IRS also changes instructions, sometimes radically, from one year to
the next. Specifically regarding Sched D, one year not too long ago the
pub said, "don't attach a brokerage statement in lieu of Schedule D-1",
then the next year they changed their tune.

-Mark Bole
 
A

Arthur Kamlet

To the specific case of the OP, where did anyone ever say he got a
1099-B showing negative net sales price? To avoid the AUR (Automated
Under Reporter of the IRS), you want to match the 1099-B amount in the
sales proceeds column of Schedule D.

Well, you want the Schedule D Sales column to be equal to or higher than
the 1099B amounts.


The IRS wants an explanation if the Sch D Sales are less than the 1099Bs
and couldn't care less if Sch D Sales are more than 1099Bs.

I agree with Lotax. The IRS can be amazingly reticent on issues that
have not been decided in court (and even those that have). Why should
they "go out on a limb" if they don't have to?

The IRS also changes instructions, sometimes radically, from one year to
the next. Specifically regarding Sched D, one year not too long ago the
pub said, "don't attach a brokerage statement in lieu of Schedule D-1",
then the next year they changed their tune.
Amazing what a few influential members of congress can get done.

And now the 8453 has a Sch D-1 check-the-box printed right on the form.
 
H

honda.lioness

Mark Bole said:
To the specific case of the OP, where did anyone ever say he got a
1099-B showing negative net sales price?
The apparent assumption (in the post to which I first responded) that
the OP had not received a 1099-B blah blah is part of what prompted my
query.
To avoid the AUR (Automated
Under Reporter of the IRS), you want to match the 1099-B amount in the
sales proceeds column of Schedule D.
The above is the sort of elaboration I was seeking in my first post to
this thread.
 
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H

honda.lioness

I come here because I *want* to hears the answers
that I *can't* find in the IRS pubs!
In answers posted here, a citation from an IRS pub and sometimes
discussion about what this citation says is key to justifying what the
answer says to do. Otherwise ISTM people cannot very thoroughly gage
the credibility of an answer. Such citations/discussion also increase
understanding for the long run. So far it remains unclear to me what
is the best approach to the OP's query. At the moment, I advise
following the Sch. D instructions, perhaps using the variations
offered there to assist in avoiding the AUR Mark mentions, and so
potentially more paperwork and labor hours lost, as the taxpayer
wishes.
 

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