How to write off worthless Enron stock?
Question:
Answer:
Tell your broker you want the stock sold if saleable, or have them send a letter stating on such and such date you paid $XXX for the stock and on Feb. whatever, 2007 (you do NOT have to wait until Dec. 31) they were disposed of as worthless. The amount you lost is (if you bought them over a year ago) a long term capital loss (not gain as one person answered) and can be used to counteract long term capital gains or up to $3,000 in earned income each year until the full amount is used. You do NOT have to send the letter to the IRS, just fill out Statement of Capital Gains/Loss (1099 sch D) and keep the letter for your records as proof incase of an audit.
wait til next tax season and dump them on 12/31/07. Report the loss in your capital gains section.
Schedule D--1040--Sales Amount --Worthless Cost--whatever you paid.
LTCG--for difference.
Enron chapter 11 plan was apporved in november of 2004, you probably should have written it off then. However since you didn't all you need to do is report it on Sch. D of the 1040. Your basis should be what ever you paid for the stock and your proceeds will be zero.
Since the Chapter 11 was in 2004, you could also consider filing an amended 2004 return reflecting the loss.
More Questions & Answers...