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Stock Sale of Bankrupt Company's Stock

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    Stock Sale of Bankrupt Company's Stock

    I have a client who purchased shares of stock several years ago for $9500. As time went on, stock price kept declining. In 2005, company filed for bankruptcy. She tried to get her "investment" of $9500 named in the bankruptcy but it was rejected. I'm not sure if the bankruptcy has been finalized. She finally sold the stock in February 2006 for $188. She wants to claim the loss in 2005. I really don't believe she has a taxable event until 2006. Am I correct?
    Snow White, EA

    #2
    Year of Loss

    The year in which the sale took place is when the loss occurred and deductible.

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