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Any idea how the company stock rule works if the stock has lost value? (I tried looking at IRS Pub 575 on-line but am having trouble acccessing the site -- will try again later).

Anyway, the company I have been consulting for over the past year has put about $4000 of company stock into my 401k account. The account is now only worth about $3000, however. These stock shares are the only monies in the account -- I did not put in any $ of my own because all the investment options the company offered have a history of greatly underperforming the S&P.

The project I was hired for has been completed, so will be leaving that company at the end of November. I want to ultimately move the $3000 worth of stock into my Roth IRA. If I transfer the company stock directly to a regular IRA, liquidate it for cash, then do a Roth conversion I will of course owe regular income tax on the approx $3000 value at the time of the conversion.

But my question is, can I take the lump-sum distribution of the stock, then get a 1099 from the company showing a negative $1000 "net unrealized appreciation" between the original $4000 cost of the shares and their current $3000 value? This loss could then presumably be applied against my 1999 taxes, and I would have the $3000 worth of stock to sell so I could put $2000 into my Roth as a year 2000 contribution and the remaining $1000 in as a contribution the following year.

Anyway, any advice or information you can give would be greatly appreciated.
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