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Hello Lokicious,

If a company declares ch. 11, at what point in the process can a shareholder claim the stock is worthless and take a tax loss? (This company is now in ch. 11, but final disposition concerning possible buy-out, unlikely refinancing, or conversion to ch. 7 will probably take until after Jan. 1.)


See Roy Lewis artticle on "Worthless Stock".

http://www.fool.com/taxes/2000/taxes000630.htm

If security analysis shows no reasonable expectation of earnings sufficient to provide value to the original stockholder's equity, and the company is insolvent, you warrent the deduction, as of that yearend.

If in doubt, take delivery of certificate, sell to in-laws without commission.

What happens if the ch. 11 process later results in some kind of return, after you've taken a tax loss?

You Have immediate income.


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