Tax question regarding stocks. WWYD? | TigerDroppings.com

Posted byMessage
Tigerstudent08
LSU Fan
Lakeview
Member since Apr 2007
4113 posts

Tax question regarding stocks. WWYD?


I sold some stocks this year that I have been holding for a while and am currently looking at having to pay taxes on ~$15,000 that I made. During a restructuring deal through Forest Oil, I acquired 324 shares of a company called Lone Pine Resources that is currently bankrupt. The stock was worth ~$4,000 @ $15.24 / share. It is now at $0.0070 / share for a total of $2.27! Would TD sell this stock to lower the tax burden for the year or hold onto it and hope something comes from nothing? Thanks

**Oh and I am going to ask my financial advisor what I should do but I just want to make sure he leads me in the right direction.

**Also, I have never used a CPA but I think I will after this year (sold stocks, bought a double, etc). Any recommendations in the NOLA area?







Back to top
Share:
Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
29997 posts
 Online 

re: Tax question regarding stocks. WWYD?


quote:

During a restructuring deal through Forest Oil, I acquired 324 shares of a company called Lone Pine Resources that is currently bankrupt. The stock was worth ~$4,000 @ $15.24 / share. It is now at $0.0070 / share for a total of $2.27!


It doesn't matter what it was worth - it matters what your cost basis is going to be - you can't write off other people's losses - as a general rule, anyway.

The only other question I would have would be whether or not there is any potential gain in this stock? If so, you could sell it on the last trading day of the year, then re-buy it on the first trading day of 2014. Locks in your loss - now, while you need it, and preserves your participation in any future possible gain (heck you can buy back in at $3.00 and increase your position- )






Back to top
LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81061 posts
 Online 

re: Tax question regarding stocks. WWYD?


quote:

sell it on the last trading day of the year, then re-buy it on the first trading day of 2014.
No, don't do that.

If he does that his sale on 12/31 would be a 'wash sale' and the IRS would disallow taking a loss on it. He has to wait a minimum of 30 days to repurchase the stock in order to be able to take the loss in 2013.

And for the OP, if a company goes into bankruptcy, even if the company emerges from bankruptcy, the current stock holders are usually left with nothing. Sell, take the loss and reduce your tax burden.






Back to top
Ace Midnight
LSU Fan
Ball, LA - Home, Sweet Home
Member since Dec 2006
29997 posts
 Online 

re: Tax question regarding stocks. WWYD?


quote:

He has to wait a minimum of 30 days to repurchase the stock in order to be able to take the loss in 2013.


Yeah, little details like that slip my mind when I give off-the-cuff advice like this.

quote:

And for the OP, if a company goes into bankruptcy, even if the company emerges from bankruptcy, the current stock holders are usually left with nothing. Sell, take the loss and reduce your tax burden.


That's solid - take the loss now when you can use it and it has definite value.

(But, remember, cost basis will determine your capital loss.)







Back to top
LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81061 posts
 Online 

re: Tax question regarding stocks. WWYD?


quote:

little details like that slip my mind when I give off-the-cuff advice like this.

Unfortunately, I've had so much experience taking losses that I know that wash sale rule very well.






Back to top
  Replies (0)


Back to top