J.K. Lasser Daily Tax Tip |
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Selling Before the Security Becomes Worthless
"To claim a deduction for worthless stock or bonds, you must be able to prove that the stock became completely worthless in the year for which you are claiming the deduction. Sometimes you can avoid the problem of proving worthlessness by selling while there is still a market for the security. For example, a company is on the verge of bankruptcy, but in 2011 there is some doubt about the complete worthlessness of its securities. You might sell the securities for whatever you can get for them and claim the loss on the sale. However, if the security became worthless in a prior year, say in 2010, a sale for a nominal sum in 2011 will not give you a deduction for 2011."
Previous Daily Tax Tips:
• 2/4/2012 - Selling Before the Security Becomes Worthless
• 2/3/2012 - Refund Deadline for Worthless Stock
• 2/2/2012 - Taxable Boot Received in Exchange
• 2/1/2012 - Transfer of Installment Notes to Former Spouse
• 1/31/2012 - Charging Minimum Interest
• 1/30/2012 - Contingent Sales
• 1/29/2012 - IRS Notice of Related Party Transfer
• 1/28/2012 - Installment Sale to Relative
• 1/27/2012 - Extension of Pledge Rule
• 1/26/2012 - Recapture of Depreciation or First-Year Expensing Deduction
The Daily Tax Tip content is provided by America's all-time best selling tax guide, J.K. Lasser's™ Your Income Tax Guide by John Wiley & Sons, Inc. Tax advice provided by The Daily Tax Tip shall not be construed as a substitute for the advice obtained or given by a certified tax professional.
