Whats my basis, and when can I take a loss?

Dec 03, 2008 2 Replies

I invested $100,000 in a company in 1998. I got a $20,000 tax credit from NYS.



Is my basis $100,000 or $80,000? I had to pay federal income tax on the credit, so if it also reduces my basis I will be taxed twice on it; so presumably it is still $100,000, but I want to be sure.



The company is nearly worthless. If I were to sell my stock to the company for a $10,000 note could I take my $90,000 loss now, and another $10,000 when the note becomes officially worthless; or something else.


Did you pay state income tax on it as well? If not, you might have different bases for state and federal taxes.

Seth

It was a NYS income tax credit; so no, I didn't pay NYS income tax on it. I see your point though; I don't know if a tax credit changes basis.

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