Stocks bought in Canada - now worthless

Jaspal · Post by **Jaspal** » Fri May 06, 2005 3:09 pm

I had some stocks when I moved to the US on HB1 about two years ago, which I transferred to my new US brokerage account. Over the period of my ownership some of them have become worthless (some before and some after my moving to US), but I still have these stocks in my brokerage account.

Can I write them off in my US tax (each year upto $3K is allowed as a capital loss). Do I need to know/find the date on which they became worthless, or I can write them off whenever convenient for me, as long I own them. Kindly advise. Thanks.

Jaspal

nelsona · Post by **nelsona** » Fri May 06, 2005 3:35 pm

"worthless' stock is usually problematic is terms of actually writing them off. Their must be either a sale, or a write-down *somewhewre* in order for IRS to recognize the disposition.

The best person to ask about this is your broker.

Methinks he has a lot of experience with this.

nelsona non grata... and non pro

Jaspal · Post by **Jaspal** » Fri May 06, 2005 4:07 pm

As per my brokerage statement these stocks already have zero value, but they are still in my account. As per IRS info worthless stocks can be written off, but I am not sure if timing is important. I mean if something became worthless two years ago (as per my brokerage statement), can I write them off now in my current tax return.

Jaspal

nelsona · Post by **nelsona** » Fri May 06, 2005 9:47 pm

From IRS Pub 550:
<blockquote id="quote">quote:<hr height="1" noshade id="quote">Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became worthless during the tax year are treated as though they were sold on the last day of the tax year.<hr height="1" noshade id="quote"></blockquote id="quote">

It later states:
<blockquote id="quote">quote:<hr height="1" noshade id="quote">If you do not claim a loss for a worthless security on your original return for the year it becomes worthless, you can file a claim for a credit or refund due to the loss. You must use Form 1040X, Amended U.S. Individual Income Tax Return, to amend your return for the year the security became worthless.<hr height="1" noshade id="quote"></blockquote id="quote">

So the ones that became worthless in years before your moved, are of no use to you on any 1040.

And, you would of course have handled to Cdn cap losses when you were deemd to have disposed them when leaving Canada
nelsona non grata... and non pro