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Author: liljacket Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 120792  
Subject: Wamu stock loss deductable? Date: 10/17/2008 5:53 AM
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A friend mentioned that the 75 shares of WAMU that I purchased( at $39.00 that are now worthless, I assume) might be tax deductible on some basis. Since I purchased them through my IRA do I assume the loss or gain is mute because of the tax deferment? I am considering converting my IRA's in 2010, if that makes any difference.
Thanks for any advice. I am a long time lurker but 2 year Fool.
Liljacket
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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102305 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 6:52 AM
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A friend mentioned that the 75 shares of WAMU that I purchased( at $39.00 that are now worthless, I assume) might be tax deductible on some basis. Since I purchased them through my IRA do I assume the loss or gain is mute because of the tax deferment?

Yes. From a tax perspective, gains and losses within an IRA are meaningless.

Phil

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Author: billjam Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102306 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 8:11 AM
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Phil addressed the specific situation correctly, of course. I'll add that in a taxable account one would have to sell the stock to recognize the loss. Currently worth 10 cents a share, I believe. When no market exists you can often get your broker to buy all your shares for $1 so you have documentation of the loss. You'll still pay commission on the sale so it will cost you a little to sell.

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102307 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 8:27 AM
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You'll still pay commission on the sale so it will cost you a little to sell

My father had a broker years ago who would buy your whole lot of "worthless" stock for either $1 or a penny, no commission. I think they were hoping to get more than that when they in turn sold it to someone else.

WRJ

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Author: Wradical Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102308 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 9:52 AM
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My father had a broker years ago who would buy your whole lot of "worthless" stock for either $1 or a penny, no commission. I think they were hoping to get more than that when they in turn sold it to someone else.

WRJ

____________________________
He probably didn't even have that hope, if it was truly worthless.
It's simply a matter of doing a client a favor.

After all, to the broker it's only $1. But to the client, being able to document a transaction and establish a capital loss can be worth a ton of money - especially if the client has capital gains from other transactions.

As we've often mentioned in other disucssions here, it's often a murky area to know exactly when a security becomes worthless; because that's the year you're supposed to claim the loss. But a sale date gives you something to point to.

Bill

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Author: imyoung Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102309 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 10:43 AM
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A friend mentioned that the 75 shares of WAMU that I purchased( at $39.00 that are now worthless, I assume) might be tax deductible on some basis. Since I purchased them through my IRA do I assume the loss or gain is mute because of the tax deferment? I am considering converting my IRA's in 2010, if that makes any difference.


Liljacket,

As a WaMu customer I've had to follow my bank's demise. WaMu provided no info on their website but JPM did. You may want to check their site http://investor.shareholder.com/JPMorganChase/press/released... . From JPM’s Press release:

New York, Sept. 25, 2008 - JPMorgan Chase & Co. (NYSE: JPM) tonight announced it has acquired all deposits, assets and certain liabilities of Washington Mutual's banking operations from the Federal Deposit Insurance Corporation (FDIC)</>, effective immediately. Excluded from the transaction are the senior unsecured debt, subordinated debt, and preferred stock of Washington Mutual's banks. JPMorgan Chase will not be acquiring any assets or liabilities of the banks' parent holding company (WM) or the holding company's non-bank subsidiaries. As part of this transaction, JPMorgan Chase will make a payment of approximately $1.9 billion to the FDIC.


The FDIC, the receiver, has further instructions, http://www.fdic.gov/bank/individual/failed/wamu.html :

VII.  Possible Claims
On September 25, 2008, Washington Mutual was closed by the Office of Thrift Supervision and the Federal Deposit Insurance Corporation was named receiver.  Subsequent to the closure, JPMorgan Chase acquired the assets and most of the liabilities, including covered bonds and other secured debt, of Washington Mutual Bank from the FDIC as Receiver for Washington Mutual Bank.  Claims by preferred stockholders, subordinated debt holders, and unsecured senior debt holders of Washington Mutual Bank were not acquired; these claims, together with proof of the claims, must be submitted in writing to the Receiver at the following address:

FDIC as Receiver of Washington Mutual Bank
1601 Bryan Street
Dallas, TX 75201
Attention: Claims Agent

The closure and the receivership do not affect the claims by equity, debt holders or other creditors of Washington Mutual, Inc., the holding company for Washington Mutual Bank.

The holders of equity, subordinated and unsecured senior debt in Washington Mutual Bank are creditors of the receivership for Washington Mutual Bank and should file claims in the receivership for recovery of any amounts that may be due to them.  Please note that under federal law, 12 U.S.C. § 1821(d)(11), claims by equity and subordinated debt holders are subordinated to claims by general creditors of the institution.  At this time, the FDIC as Receiver for Washington Mutual Bank does not anticipate that equity and subordinated debt holders will receive any recovery on their claims.

Preferred stock, subordinated debt, and senior debt holders of Washington Mutual Bank need to file a claim.
(Emphasis mine)


They also provide a phone number so you could ask them what type of proof they'll need from you. It will take some time before everything is sorted out but you won't have to pay a dime to get proof you lost a bundle. And you may even get a few dollars back!

Good luck,

im
WaMu customer, feeling for you (luckily never bought shares though I was tempted way back...)

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Author: wrjohnston91283 Big red star, 1000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 102311 of 120792
Subject: Re: Wamu stock loss deductable? Date: 10/17/2008 2:48 PM
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WaMu customer, feeling for you (luckily never bought shares though I was tempted way back...)

I almost did too, but I ended up buying a financials ETF that didn't do well (although better than the 100% loss WM suffered.

WRJ

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