worthless stock

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?

Reply to
martin lynch
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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.

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.

Reply to
Arthur Kamlet

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

Reply to
Bill

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.

Reply to
Arthur Kamlet

What IRS publications says not to do this?

Reply to
honda.lioness

What does the 1099-B say is the proceeds? If the proceeds are $0, just add $3 to the cost basis.

Reply to
removeps-groups

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.

Reply to
honda.lioness

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 ...

Reply to
lotax

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

Reply to
Mark Bole

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.

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.

Reply to
Arthur Kamlet

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.

The above is the sort of elaboration I was seeking in my first post to this thread.

Reply to
honda.lioness

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.

Reply to
honda.lioness

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