question on stock of company that filed for bankruptcy

Posted by ap on November 27, 2006, 12:28 pm

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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!

Posted by Fred Smith on November 27, 2006, 5:56 pm

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You have some options:

1. Sell the shares to a third party (for, say $1). 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.

--
Regards,
Fred

> 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!

Posted by Jim - NN7K on November 27, 2006, 9:39 pm

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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:

> You have some options:

> 1. Sell the shares to a third party (for, say $1). 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.