question on stock of company that filed for bankruptcy

Nov 27, 2006 2 Replies
A

Hello, I am currently holding shares of my previous company which filed for banruptcy and has been delisted from the exchange for many months now. It filed for bankruptcy this year and my shares are worthless.



What should I do to get a tax deduction ?



I had purchased the majority of these shares as employee options.



Thanks for any advice!



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F

You have some options:

  1. Sell the shares to a third party (for, say ). That establishes a non-arm's-length transaction that you can use on this year's tax return.
  2. Wait until your broker writes off the shares. However, this could take some time, as filing for bankruptcy is not actual bankruptcy.
  3. Claim the loss on your tax return, and take your chances. It's unlikely you'll ever be questioned on it, and if you do, you have a reasonable response.
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J

Or: option 4 Contact your broker, and (MORE THAN A FEW ) brokerages will BUY these bankrupts for a PENNY for the LOT! (Even if 10 Million Shares)! Granted, a lousey way to get a tax loss, but makes it legit. Smith Barney, Merrill, and more than a few other houses give you this option. Jim

Fred Smith wrote:

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