Nick D wrote:
- quote -

The tax authorities will always want you to report your
income in the year that the income was reported to them. As
long as you can show that the loss was in 2004, you can
report it in 2004. As there is no income reported on the
1099, it isn't going to matter to any IRS computer that you
left it off of your 2005 Schedule D.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"A.G. Kalman" <glendale202-mtmtax[at]yahoo.com> wrote in
- quote -

Sorry for the excessive quoting - but it was a while ago
that I posted this and I think the original text may not be
on most people's servers.

Anyway...

I called the IRS today.

I spoke with two separate people on the two topics.

On the above - where I had a worthless security go worthless
in 2004, but did not have it removed from my account until
2005... And it is shown on my 2005 1099...

The IRS rep said that I have to report it in the year it
showed on my 1099. I didn't make the point to her that when
I say that the company went insolvent in 2004... Really -
it went bankrupt, assets sold at auction...

But she was quite strong on the point that you report it the
year it shows on the 1099.

Did she give me incorrect advice? Should I have pressed her
and explained even though it was in my account - it really
was worthless as of last year?

- quote -

Ok on this one - the other IRS guy gave me the same info.

Thanks

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Dirk wrote:

- quote -

It is highly likely that your shares were worthless as of
12/31/04 and you have a 2004 loss. It is also possible that
the shares were not worthless at 12/31/04. If you can show
that there was still a market for those shares, then you
would have a 2005 loss. As an aside, I personally consider
shares to have value if the result of multiplying the # of
shares times the market price per share equals at least 50
cents (rounds to $1).

When you amend you send the 1040X and the amended Schedule
D. The 1040X includes your before and after 1040 data that
the IRS wants.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Hey everyone.

I have two questions perhaps someone can help me with:

1) A company I owned shares in went insolvent in 2004.
(assets were liquidated in 2004) Last year (2005) I asked
my broker to remove it from my account. They essentially
bought the shares for free. It shows up as a sale, with $0
in proceeds on my 1099.

Can I claim the loss this year, or do I have to have it
removed from my 1099, and claim that it went insolvent last
year, and take the loss on an amended return for 2004? (Had
I known at the time I had to do a 1040X anyway - I probably
would have just included that on my 2004 1040X / Schedule D)

2) I have to file a 1040X due to a missed LT carryover loss
from 2003. I know I have to file 1040X, and an updated
Schedule D. But do I have to include either a copy of the
original 1040, and updated 1040, or the original Schedule D?
(I'm normally fairly competent when it comes to taxes - but
Taxcut seems to have let me down. If I open my 2003 tax
return in TaxCut 2003, it does properly show the amount to
carryforward to 2004. But after importing it into 2004, and
reviewing last years tax data... That carryforward amount
is zero. I can't explain it, I have a hard time believing
there is such a blatant error in taxcut 2004 even after
applying all the latest patches) I screwed up by not
catching it in my own review.

Thanks all!

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >