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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15165
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Several years ago I invested in a privately held company called

Resolved Question:

Several years ago I invested in a privately held company called Amidee Hotels and Resorts. They were raising capital to purchase and reverbish commerical properties to resell them and pay approximately 12% return to the investors. In 2010 they filed chapter 11 bankruptcy proceedings and I have never received any offical documentation that the shares I purchased are now valueless.
These shares were being held for me by a company called Sterling Trust as this was an IRA investment. Sterling Trust recently sold it paper to Equity Institutional. I was not please by the service of the new company so I transfered my IRA holdings to my XXXXX XXXXX broker. Because they new the Amidee shares had no value they would not accept these shares and Equity has now sent me the worthless stock shares and tells me they are reporting this taxable distribution to the IRS. How do I make sure I don't have to pay taxes on this valueless investment?
Submitted: 1 year ago.
Category: Tax
Expert:  Megan C replied 1 year ago.

MyVirtualCPA :

Hello! I am a CPA here to assist you with your tax questions. My goal is to provide you with excellent service today.

MyVirtualCPA :

This won't be taxable, because the value of the shares is less than the basis.

MyVirtualCPA :

The only time you have to pay tax is when you receive funds that are greater than what you bought into the company

Customer:

But Equity is sending a value of $40,000 distribution to the IRS

MyVirtualCPA :

How is it $40,000 when you received nothing?

Customer:

Because that is the face value shown on the stock certificates, in their mind that is what the stock is worth and therefore they are reporting the value distribution.

MyVirtualCPA :

This is in your IRA, correct?

Customer:

It was an IRA account, because I closed my account with Equity they are considering this a distribution

MyVirtualCPA :

If you have any documents indicating that the stock was worthless then you could could provide these to the IRA trustee to request a letter of correction that you could forward to the IRS. If the IRA trustee will not cooperate then if you have any documents indicating the worthlessness of the stock you could send these to the IRS with an letter of explanation.

Customer:

The best I have been able to find is an article in a Houston newspaper stating that chapert 11 was filed. I never received any notice from the company or the bankruptcy court about the final disposition. I just know if you try and call Amidee, the phone has been disconnected.

MyVirtualCPA :

The documentation of the bankruptcy should be enough.

Customer:

Ok, thanks much for your help.

Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 15165
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and 2 other Tax Specialists are ready to help you
Expert:  Megan C replied 1 year ago.
Thanks, Maureen for your positive rating. Please come back and visit MyVirtualCPA for any of your tax, finance, or social security needs. It was a pleasure working with you today.
Customer: replied 1 year ago.


okay

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