Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.
In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.
It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.
On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.
To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss
is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.
If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.
Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Apr 30, 2014 9:53 AM, "Laurie Frederiksen" <laurie@bivio.biz> wrote:
Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.
In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.
It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.
On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.
To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss
is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.
If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.
Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.
Laurie Frederiksen Invest with your friends! www.bivio.com
On Apr 30, 2014 9:53 AM, "Laurie Frederiksen" <laurie@bivio.biz> wrote:
Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.
In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.
It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.
On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.
To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss
is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.
If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.
Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.
Laurie Frederiksen Invest with your friends! www.bivio.com