Enron 1099B

I don't think so. This stock is long since delisted and worthless. I've also never heard of issuing a 1099-B for a worthless security, only for a sale. Who issued the 1099-B?

Ira Smilovitz

replying to ira smilovitz, Silverstein wrote: Oppenheimer & co. Add this to conundrum. Yes the stock was delisted and officially cancelled on Nov. 17, 2004 but not worthless in an absolute sense. The last distribution of proceeds from the Net Settlement Fund in the EnronCorp. Securities Litigation class action of which I was apart of began in October

2014 and ended in 2015. I did not receive any distribution in the third and last checks that were distributed. There is a distinction between worthless and abandoned as made by the Fifth Circuit court of appeals in the Pilgrim's Pride case. If I abandoned the stock and relinquished all rights in the security and receive no consideration for the security, would the stock then become worthless to me in 2015? If so would the loss be a capital long term loss or an ordinary loss. Or am I confusing when the stock was actdually and technically worthless. Thanks.

If you are getting distributions from securities litigation, the amounts received are technically returns of capital. To the extent that these returns are in excess of your cost basis, they are taxable as capital gains.

So, if you wrote off your Enron shares as worthless back in 2004, you have no remaining cost basis and the distribution is 100% LTCG. If you never wrote off your Enron shares, you can reduce your cost basis in the shares by the amount of the distribution.

I'm not aware of the specifics of the Enron Net Settlement Fund, but I'm relatively sure that participants in the litigation and those who are entitled to distributions from the fund are no longer considered to own any Enron stock or any other security. But I could be wrong.

Ira Smilovitz

I believe the IRS will take the position that the stock became worthless when Enron exited bankruptcy at the end of 2004 and the common shareholders got nothing and the stock was cancelled. The company was renamed after exiting bankruptcy and was privately held. Prior to exiting bankruptcy and the stock cancellation, the stock traded via the pink sheets (penny stocks). Therefore, the IRS will conclude that 2004 was the year the investment became worthless and the loss should have been recorded. The fact that some lawsuits against investment bankers/brokers that sold the stock between certain dates was settled and the shareholders got some money back does not change the fact that the stock was worthless at the end of 2004.

If you had written it off, the money you received would be long-term capital gain with zero cost basis unless the documents you received with the money stated that some portion represented interest income. Then you would have both capital gain and interest income.

If you missed the 2004 boat, it is now too late to claim the loss.

If the stock was worthless in 2004, you would need to claim the loss on the 2004 return, which is closed. (I searched the web, and it appears the stock was not necessarily worthless in 2004, but almost certainly worthless by 2007.) The earliest return that is open for the purpose of claiming a "worthless" stock loss is 2007.

However, if you have capital loss carryovers from 2004 (or whatever the relevant year is) through 2011, you might be able to file a return adjusting the carryovers.

-- Arthur L. Rubin, CRTP, AFSP in Brea, CA (no clients had Enron stock who didn't already claim it at an appropriate time)