ESOT kaput. Tax consequences?

[Peachie]

Recently, my company was sold. Employees were ESOT participants, and we had to sign off on the sale to completely disband the ESOT. The Trust was basically worthless, so we all suffered losses. We made no contribution to this fund. One of the employee's accountants has told him he can take a loss on his income tax. This is a retirement vehicle and perhaps I am confused. I know that we have no basis in this company stock plan and would have had to pay taxes on the distribution once we received at retirement. Now that it's worthless, are there tax write-off benefits available? I think not. Could someone please enlighten me on this subject and set me on the right path.

Thanks.

Peachie

[Burke]

You are thinking correctly. There is no taxpayer basis in the fund. Ergo, there is no tax loss. It's just money you never got (and never paid taxes on.) Use this example: I never won the lottery either, but I did not get to claim the loss.

[Peachie]

Thought so!

Thank you Burke. That's exactly how I looked at it also.

Peachie

[JohnH]

Burke - I like your lottery example.

But no need to worry about not winning the lottery.
Your odds of winning are roughly the same regardless of whether you buy a ticket or don't buy one.