Grex Finance Conference

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Grex Finance Item 28: Capital loss write-off
Entered by eprom on Tue Feb 4 17:15:04 UTC 2003:

hmmmm....

I was hoping someone can point me in the right direction.

I bought 500 shares of XOXO back in October 2001 for around a $1/share.
A few weeks later, trading was halted and eventually the stock was 
delisted and put on OTC BB. I figured I was going to hold on till the 
bitter end.....

Well that end has finally came. As of 16 Jan 2003 the stock stopped 
trading.


now here's my problem:


According to Yahoo! ( http://finance.yahoo.com/q?s=xoxoq.ob ) the stock 
was last traded at $.07/share. Ameritrade (formerly Datek) is showing 
the ticker symbol to not exist and a final price of $0.00...so what 
should I list on my write-off 0 or 7 cents?

Also (and probably most importantly) how do I prove the this stock is 
esentially worthless to the IRS i.e - what documentation should I have 
on hand as evidence?

Can a capital loss be used to offset you regular earned income or only 
against capital gains?

2 responses total.

#1 of 2 by i on Tue Feb 11 02:37:04 2003:

IANAE (i am not an expert), but i'd say to peek over IRS publications 544
& 550 on the IRS web site first.  If that doesn't make it clear, call the 
IRS (800-829-1040).  Looking at a copy of Schedule D, it appears that the
first $3K/year of capital losses can be used against regular income, more
than that can count against capital gains or (????) future year's income.

#2 of 2 by eprom on Fri Feb 20 16:27:41 2004:

well, I'm writing off my two non-performing stocks this tax year (2003).

I did some more research and according to the IRS pub 550 (pg 36):

Stocks, stock rights, and bonds that became worthless during the tax year 
are treated as though they were sold on the last day of the tax year.

Schedule D is super confusing this year.

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