Loss on Stock Company Bankrupt

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  • Bonnie
    Senior Member
    • Jan 2007
    • 568
    #1

    Loss on Stock Company Bankrupt

    Customer bought stock in 2005 for $3500. In 2006 the company went bankrupt and no longer exists. Can the taxpayer claim this as a loss?
    Tags: None
    • Brad Imsdahl
      Senior Member
      • May 2005
      • 623
      #2
      It would be a nonbusiness bad debt, reported as a short-term capital loss on Schedule D.

      See TTB, page 8-6 for details.

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        • Davc
          Senior Member
          • Dec 2006
          • 1088
          #3
          Keep in mind that it has to be totally worthless. If any litigation is continuing, then it's not yet reached that point. The TP's best bet is to sell his shares to his broker for $1. Then it's just a stock sale.

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