Replies to post #345408 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[drugmanrx]

I wish you please tell that to TD ameritrade

To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

They will not allow me to abandon the two stocks while they are in global lock down and remain in my account, SPNGQ and VYON.

They will not allow me do declare them worthless and remove them.

The both stocks still hold a value in my account, the value is not zero.

SPNGQ actually traded this year and rose in value.

What about those facts jack, would appreciate the feedback.

.

[shajandr]

READ and learn what teflon2insults says - same as what I've told you.

Teflon2Insults
Wednesday, 07/08/15 12:00:42 PM
Re: shajandr post# 345406
Post # of 345461
Worthless or Abandoned Stock _DEFINITIVELY!!!!

Yes, you need new tax advisors. I am a tax expert - by formal education and 35 years experience.

Worthless Stock: Agreeably there was ONE IRS finding that a stock with any value at all is not worthless. That was in a case where the owner (a corporation) had a large amount of stock that even in if marginally worth anything they would actually have a valuable asset. The most reasonable and certain determination of the IRS position is that if it costs more to sell than it is worth, it is worthless. And of course, the obvious way to make any investment a loss is to sell it....say to a relative for 1 cent. (That type of transfer is allowed, regardless of the "lockdown" which covers public trades). Duh! Get a better advisor!

However, holders of this stock (or any capital asset) do not need to prove worthlessness anyway. They may declare it "abandoned" . At that point you report it as the loss it is. NOT a bad debt (which many try because it would be offset against the higher taxed ordinary income rather than offset/3K yr restricted capital gains).

DIRECTLY FROM IRS SITE: If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Treat a stock or other security as totally worthless when it has no value and you must abandon it. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year.

Report worthless securities on Form 8949 (.pdf), Part I or Part II, whichever applies. Indicate as a worthless security deduction by writing Worthless in the applicable column of Form 8949.

NOW THE BAD NEWS: Te IRS REQUIRES that a worthless security is reported as such on the last day of the year it became worthless. (That to avoid someone trying to get the better short term loss handling by holding on till a future year). This stock clearly - by any interpretation - became worthless when the Federal Court advised that there was no chance of any recovery to shareholders. Therefore, by rule you really should have done so years back and must file an amended tax return for that year. (And presumably any that you may have to carry the loss forward to). You may file back as far as 7 years.

Of course, if somehow the investment does eventually have any value refunded to you, you report it as a gain in the year received....and everything is even.
And as they say - Thats the facts Jack.

When SPNG went Chapter 7 and shareholders were awarded NOTHING and all company assets were sold, it became a worthless security. The notation of shares in your TD Ameritade account is IRRELEVANT. That is what both I and teflon2insults are telling you. And we are both telling you to get a new tax advisor - your current one is incompetent. Not slightly incompetent, not marginally incompetent - but someone who should not be preparing taxes for anyone.