tax question on 'dead' stock.

Discussion in 'Taxes and Accounting' started by gaj, Oct 17, 2002.

  1. gaj

    gaj

    a year ago, i bought a few hundred shares of a stock on a potential dead cat bounce. well, the cat was dead all right; halted, and then reopened on the pink sheets, and trades at 1/10 of a penny, if that.

    if i try and sell the shares via my broker, i pay for the transaction than i'd get from the shares!

    i've got two questions:
    1) i want to write this off this year, and know there's a way to do it. how do i go about doing that?
    2) can i say to my broker (in this case, it's etrade) "hey broker, i don't want my shares. they're yours, enjoy them."?

    thanks for any help...
     
  2. You can declare them worthless and take the capital loss on schedule D.
     
  3. 1. If you "declare them worthless", and they later come back to life, the increased value would be taxable. And, you need to document the circumstances in case of audit.
    2. Perhaps best to just sell, record the loss and be done with it?
     
  4. gaj

    gaj

    well, i found out the answer, at least with etrade (which is where this was).

    first, the commissions from sale of a stock at e-trade can never exceed the proceeds from the sale. so, my commission will be #shares * 1/1000 of a c.

    because i'll have to do it as a market sale, and they don't take market orders under $1, i'll have to call in on monday and have someone do it for me.

    and, BECAUSE the commission is virtually zero, it will not be registered on my 1099 (!). i'll have to keep the transaction statement.

    but i'll have one off the books.