InCapta Inc (INCT)

[wickw50]

Sent By: Steve1 To: wickw50 Date:12/16/2008 12:49:46 PM


hi - please pass on to GMFX board if you think appropriate.

Writing off worthless stock

In most cases you can't deduct a loss on a stock unless you "realized" it by selling the shares before the end of the year. The IRS just doesn't want to hear about your "paper" losses.

But there is an exception to that rule. You can declare a stock worthless the year the stock became wholly worthless and deduct its entire cost. Just because a company went bankrupt doesn't mean the stock is worthless. The IRS says that if there's any chance a stock can recover, it's not wholly worthless.

Some advisers say the stock is not worthless if it still shows up trading on the pink sheets with an asking price of a fraction of a penny per share. But according to an experienced CPA and a long-time IRS employee, if your block of stock would bring less than the broker's commission for selling it, then they'd claim a worthless stock deduction -- assuming they had evidence that the company met its demise.

To write off a worthless stock, you report it on Schedule D as though you sold it for $0 on December 31. That date also determines whether you have a short- or a long-term loss. In the section where you're asked for the sale date and selling price, just write "worthless."

http://www.kiplinger.com/features/archives/2005/01/taxguide1.html#worthless