Pete Posted January 8, 2005 Share Posted January 8, 2005 I had a bunch of shares of Global Crossing which are now rendered useless as of 12/31/2003. I did not claim that loss last year. Anyways I claimed the loss this year on Taxcut and it said that might sound an alarm. Will that delay my refund or cause an audit? Should I ammend my 2003 tax form? How should I handle this writeoff? Thanks in advance! Link to comment Share on other sites More sharing options...
MVJim Posted January 8, 2005 Share Posted January 8, 2005 I had a bunch of shares of Global Crossing which are now rendered useless as of 12/31/2003. I did not claim that loss last year. Anyways I claimed the loss this year on Taxcut and it said that might sound an alarm. Will that delay my refund or cause an audit? Should I ammend my 2003 tax form? How should I handle this writeoff? Thanks in advance! 198231[/snapback] You need to ask yourself who rendered them useless or in this case worthless. Sometimes, that is a matter of your judgement when you perceive them worthless (assuming you have substantial basis for making that decision). Having a stock loss on your return does not in and of itself sound an alarm. Remember, it is a capital loss and combining that loss with other sales, you can only take a $3,000 capital loss on your return in a given year. However, any unused loss carries forward to future years. One thing to keep in mind. If you write it off as a total loss in either 2003 or 2004, whichever you make a decision on, if the stock rebounds in the future, your new tax basis in that stock is $0 since the tax basis at the time of declaring the stock useless was written down to $0 from the original tax basis. Thus, anything you would sell it for would be gain. Hope that helps. Now, back to the rain in the OC!! Link to comment Share on other sites More sharing options...
Pete Posted January 8, 2005 Author Share Posted January 8, 2005 You need to ask yourself who rendered them useless or in this case worthless. Sometimes, that is a matter of your judgement when you perceive them worthless (assuming you have substantial basis for making that decision. Having a stock loss on your return does not in and of itself sound an alarm. Remember, it is a capital loss and combining that loss with other sales, you can only take a $3,000 capital loss on your return in a given year. However, any unused loss carries forward to futire years. One thing to keep in mind. If you write it off as a total loss in either 2003 or 2004, whichever you make a decision on, if the stock rebounds in the future, your new tax basis in that stock is $0 since the tax basis at the time of declaring the stock useless was written down to $0. Thus, anything you would sell it for would be gain. Hope that helps. Now, back to the rain in the OC!! 198241[/snapback] No I mean literally rendered useless. They have zero value whatsoever. Global Crosssing no longer exists. Thanks for your reply though. Link to comment Share on other sites More sharing options...
Charlie68 Posted January 8, 2005 Share Posted January 8, 2005 your judgement is irrelevent. You can only take the loss in the year they become truely worthless - I did not follow Global Crossing, so I dont know if it was 02,03,04 ... If it was worthless in 03, you are supposed to amend 03. you cant just pick which year you want You might get away with taking it in 04 just because it goes unoticed. If it is big $s, then I would amend 03 Link to comment Share on other sites More sharing options...
HopsGuy Posted January 8, 2005 Share Posted January 8, 2005 At my firm, your Global Crossing shares will need to be journaled to a "worthless securities" account. This is your "sell transaction" that locks in the loss. I am assuming you didn't use mark-to-market for your gains/losses last year right? Anyway, our company line is "consult your tax professional". Link to comment Share on other sites More sharing options...
MVJim Posted January 8, 2005 Share Posted January 8, 2005 My point above was that you need to have substantial basis as to when you can take the loss on what is considered a worthless stock. And you must take it in the year of the loss. As a matter in fact, if it indeed was declared worthless in 2003, you would probably benefit by amending if the loss was large as you could possibly take a $3,000 loss in both 2003 and 2004, assuming no other capital transactions. However, I do agree with the previous message, "consult for tax professional". The rain has finally stopped in the OC and the golf course will be open. Fore!! Link to comment Share on other sites More sharing options...
Fezmid Posted January 8, 2005 Share Posted January 8, 2005 Just because the company doesn't exist, doesn't mean the stock is worthless. Did you receive a letter from your broker stating that it was worthless? If not, it may still have value. As an example, I purchased a couple hundred shares of WebVan stock back in the .com days. The company went bankrupt several years ago. Somehow, it still had a value of 0.0002/share. Don't ask me who's buying it, as I have no idea. I asked my stock broker if they could declare it worthless, and he said I'd have to execute a trade. Lovely. As others have said, if it went valueless, you'll (technically) have to amend your 2003 taxes. If you need more specifics, let me know; my wife does tax preparations (she's actually at H&R Block working right now). CW Link to comment Share on other sites More sharing options...
KD in CA Posted January 8, 2005 Share Posted January 8, 2005 Ask Terry McAuliffe. Link to comment Share on other sites More sharing options...
stuckincincy Posted January 8, 2005 Share Posted January 8, 2005 Ask Terry McAuliffe. 198601[/snapback] Ah, yes. "How To turn $100,000 into $19,000,000 in 3 Months...". Link to comment Share on other sites More sharing options...
TigerJ Posted January 8, 2005 Share Posted January 8, 2005 I have nothing to add in the way of advice. I did sell several stocks last fall that had had big losses. I'm hoping that by taking those losses now, or at least the first $3000 I can get my daughters a little more financial aid for college. FAFSA forms and financial aid for college is a bigger headache than taxes, and taxes is a big enough headache. Interestingly, I tried to sell one stock and there was no buyer. It is worth about what Global Crossing stock is worth, allthough the company still exists. For now, I decided to hold onto it. If it comes back a bit maybe it'll cut my losses some. Link to comment Share on other sites More sharing options...
KD in CA Posted January 8, 2005 Share Posted January 8, 2005 Ah, yes. "How To turn $100,000 into $19,000,000 in 3 Months...". 198622[/snapback] Damn those Enron guys and their Republicans pals! Link to comment Share on other sites More sharing options...
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