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Then why did Washington Mutual file for chapter 11 bankruptcy protection? And have the stock relegated to the pink sheets?
The pink sheet stocks were tradeable until March 7, 2012. Shouldnt this be the date of worthlessnes if no futher legal actions are pending?
Washington Mutual Bank was placed into a Federal Deposit Insurance Corporation (FDIC) receivership on September 25, 2008, and immediately sold to JPMorgan Chase (JPM) for $1.9 billion. Any stock ownership interests in WaMu bank were rendered worthless by the FDIC receivership. But the morning after WaMu bank was sold, its parent holding company, WMI, filed for Chapter 11 bankruptcy protection in Delaware.
WMI ended up with three different stocks, including common shares that continued to trade on the so-called “pink sheets” under the symbol WAMUQ.PK after being delisted from the New York Exchange.
Then there was a ballot process early this year. Shareholders who voted for the settlement, signed the required release, and mailed it back in a timely fashion, will get a share of the $140 million reinsurance company that will exist after the bankruptcy. About 60% of the common shareholders did just that, according to one of the attorneys involved. The remaining 40% get nothing.
"Relegated to pink sheets is not accurate"
That was a different security.
When you either accepted the settlement or did not the loss manifested.
But the DATE of the worthlessness of WMI is September 25, 2008.
Maybe this will help:
I end with this.When a stock is worthless from ... (1) a finance (conventions of modern finance - not meant to replace the colloquial use of the term "financial") perspective.(2) Worthless under the treasury regs, as above (has the full force of law, but not always what's practiced by IRS until you force them to tax, federal district or Supreme Court)OR (3) conventional practices and procedures of IRA are many (mostlyy, in my experience) three different things.If your objective is to make the case that the stock became worthless this year, that WILL line up with the guidance IRS gives it's field agents ... treat the stock as if it was sold for $0, on December 31st of the tax year when there was absolutely no chance of getting a penny out of the capital asset.You will have an excellent case ft you take take it this year, and document that the point in time that you had no chance of getting anything was the date by which you had to accept the settlement mentioned above, or get nothing.
Be prepared, however for THEM to try to make the case that you could have settled, and just because you missed the opportunity, doesn't give you the right to write off the full amount.
My experience with these folks and my clients has been that they will try to make the case that you can only write off the difference between basis and what you could have settled for.
Hope this helps