GM stock, I believe became worthless in 09. Client had the stock certificates and is now turning them into his broker to get a no worth certificate. What year do i get to take the loss on the stock? Do I have to go back to 09, he'd like to take in 2011, or since the cerificates were turned in 2012, do I use the loss in 2012?
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It depends . . .
Without doing the research (it IS April!) IIRC a stock is deemed to be worthless on a fixed date, 12/31/20XX, of the calendar year in which it is no longer traded.
This is a separate issue from when a stock is, in layman's terminology, "worthless" and is trading for pennies of the original investment. If it is still trading, it is not worthless. Then you need an actual sale to close that chapter.
Otherwise, you cannot pick and choose a tax year to claim the demise of the stock so as to best suit your personal tax situation.
I'm sure the IRS has publications out there to provide you with the correct answer. The stockbroker, who will automatically chirp "we don't offer tax advice," should be able to provide you with the relevant facts about the history/status of the stock.
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Are you sure they are not GM bonds?
JenMo, make sure you client isn't confusing his GM stock with GM bonds for most of the bondholder received stock in the current GM.Comment
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He had the stock certificates with the number of shares, par value, etc. In some envelopes, a 1099 of sorts was also there showing what GM contributed to the purchase of the stock, and it looked as though he had to pay tax on GM's part. Too many years ago, I wasn't doing taxes then. But, since stockbroker is giving a no worth cert in 2012, probably best to use in 2012?Comment
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Actually that (old) Gm stock became worthless on the date the company emerged from chapter 11. That is when that stock ceased to be traded and new stock was issued.ChEAr$,
Harlan Lunsford, EA n LAComment
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2011
There was an article in the Detroit Free Press that a client passed on to me. It said the loss can be taken in 2011. On 3/31/11 the stock stopped trading on the open market. Here is the article: http://www.freep.com/article/2012032...s-on-GM-sharesComment
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