Mr Cooper Group Inc (COOP)

[gold-nugget]

Worthless Securities

In addition to authorizing a deduction for nondepreciable assets used in a business, Sec. 165(g) allows a deduction for the loss sustained by a taxpayer resulting from the worthlessness of a security.(41) For purposes of this section, a security is defined as a share of stock, a right to acquire a share of stock, or a bond, note or other evidence of indebtedness.(42) The loss from a security is treated as resulting from a sale or exchange on the last day of the tax year. In most cases this will result in a long-term capital loss.

The loss will be treated as ordinary if it is the security of an affiliated corporation.(43) To be affiliated the corporation must own stock possessing at least 80% of the voting power and at least 80% of each class of nonvoting stock. In addition, the subsidiary must obtain over 90% of its gross receipts from active sources.