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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4676
Experience:  35 years tax experience, including four years at a Big 4 firm.
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My question is in reference to Stocks. One of the companies

Customer Question

My question is in reference to Stocks. One of the companies that I own filed chapter 11 this year which has been completed. I had approximately 201,000 stock that cost me around $350,000 and now I own 745 stock that shows a value of $1900. Even though I have not sold any of this stock, will this still show up in the realized loss report? Or do I have to sale the remainder of the stock before I can show it as a loss? Will I be able to claim this loss? Please advise me on what I should do? Thanks!
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.

Hi from just answer. I'm PDtax, and can assist.

Expert:  PDtax replied 1 year ago.

Typically, declines in value do not create tax losses. You have to sell the shares to realize the loss. Your situation is different.

In chapter 11, new shares are often issued to replace the equity you purchased. Often it's called "new common", or other such label.

Expert:  PDtax replied 1 year ago.

You have to sell your remaining shares to recognize the loss for tax purposes. The exchange, if there was one, or the revaluation of the old shares does not create a tax loss.

Thanks for asking at just answer. Positive feedback is appreciated. I'm PDtax.