Replies to post #302792 on Sulja Bros. Building Supplies, Ltd (SLJB)

[tld55]

Abandonment
At long last, in 2008, the Treasury adopted regulations saying you can establish the worthlessness of securities by abandoning them. The regulations do not explain the steps that would constitute abandonment, but it seems reasonably clear that gifting or donating securities is not the same as abandonment: you have to give up all rights to the shares, including the right to determine who would enjoy the benefit if they somehow recovered value.

Note also that the regulations say abandonment itself doesn't create the loss; instead, it merely establishes worthlessness. That means you're still playing within the rules for worthless securities. The date of your loss is the last day of the taxable year in which the abandonment occurs, not the date of the abandonment. Also, you can't claim an ordinary loss when abandoning a security if you would have a capital loss under the usual rules for worthless securities.

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For those looking for a one time write off, I'm not saying sell, but abandonment. Talk to your broker. Again, I'm not sure what your broker can do with these shares. They may gather dust or they may be able to sell them for shorts to cover. And yes, believe me, this is shorted.