As an investor, you may be interested in the IRS regulations concerning losses sustained from abandoned stock or other securities. As you know, a security is a share of stock in a corporation; a right to subscribe for, or to receive, a share of stock in a corporation; or a bond, debenture, note, certificate, or other evidence of indebtedness (with interest coupons or in registered form) issued by a corporation, a government, or a political subdivision of a government.
When you abandon a security, you establish its worthlessness to the IRS. In order to successfully abandon a security:
- you must permanently surrender and relinquish all rights in the security; and
- you must not receive consideration for the security.
Generally, a loss established by the abandonment of a security is treated as a loss from the sale or exchange of a capital asset on the last day of the tax year. However, the amount allowed as a loss deduction is subject to the capital loss limitations.
We can help you maximize the tax benefit of your capital loss; however, you must maintain appropriate records. If you have any questions, please contact our office at your earliest convenience to arrange an appointment.