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Old 02-24-2010, 01:28 PM
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Talking espp loss

Can I deduct the losses on purchase of $13,000 of securities from my Company that I work for, that has filed for bankruptcy? How do I report these losses and how much can I deduct?

Thanks..


Last edited by TaxGuru : 02-26-2010 at 01:16 PM.


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Old 02-26-2010, 09:56 AM
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unrealized loss

Unless you sold your holdings, you cannot claim a loss
At this point it sounds as though you have an unrealized loss...at the time you liquidate...or sell your holdings you may realize that loss. There are limits on how much you can deduct each tax year, but these are considered capital losses and you will need to itemize in order to claim them. I would consult a financial advisor before making any decision to liquidate your current holdings though.



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Old 02-26-2010, 01:17 PM
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Yes, you can deduct the entire loss of $13,000 on Schedule D. You should indicate that the stock is worthless. There is an option available in the software program to indicate that the Security is Worthless.

So, on Scheduel D. the sale price indicated would display as "Worthless", whereas the cost basis would be $13,000.

But, remember, you are only entitled to deduct a maximum of $3,000 of capital losses in any given tax year, with the balance carried over for future use to be either offset against future potential capital gains or deduct another $3,000 of capital losses with the balance carried over for future deductions.

Here are both instructions to Schedule D and an actual copy of the Form Schedule D. I am sure that you will gain additional insight into this form by clicking on the 2 links below.

http://www.irs.gov/pub/irs-pdf/f1040sd.pdf (Actual Form)
http://www.irs.gov/pub/irs-pdf/i1040sd.pdf (Instructions)

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