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Bankruptcy
Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.

In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.

It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.

On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.

To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.

If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.

Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.

Laurie Frederiksen
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Does this apply to general motors also?

On Apr 30, 2014 9:53 AM, "Laurie Frederiksen" <laurie@bivio.biz> wrote:
Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.

In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.

It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.

On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.

To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.

If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.

Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+


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Dear Gloria,

GM stock you kept should have been written off as worthless in 2011. Here is a note from an original Club Cafe posting:

Write Offs of Old GM Stock

and here is a further discussion of the topic:

Time To Claim Tax Loss On GM Shares



Laurie Frederiksen
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www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
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On Sun, May 25, 2014 at 5:59 AM, Gloria Graham <ggraham803@gmail.com> wrote:

Does this apply to general motors also?

On Apr 30, 2014 9:53 AM, "Laurie Frederiksen" <laurie@bivio.biz> wrote:
Sometimes you'll own stock in a company which files for bankruptcy. A recent example is Patriot Coal. It's original ticker was PCX. Some of you may have received shares when it was spun off from Peabody Energy (BTU) in 2007.

In 2012, Patriot Coal filed for bankruptcy protection. That doesn't mean it was bankrupt, it was just the start of the bankruptcy process. But it did mean the shares were delisted from the major exchange and it traded over the counter with ticker PCXCQ.

It's shares still had value, it just wasn't much and it wasn't as easy to track or trade them.

On December 18, 2013, the plan for them to exit bankruptcy was finally approved. As part of that plan the original shares were cancelled completely. That is the point at which any shares you held became worthless and you can claim a loss.

To do that, you need to record a sale of the shares for zero dollars on the last day of the tax year. This affects whether your capital loss is long term or short term. You need to report the loss on your taxes for the year the shares actually became worthless. This was 2013 for PCX.

If you didn't report the loss for 2013, you can't report it in a later year. But you can amend your 2013 return for up to 7 years to claim it. Each of your members would then need to amend their personal taxes to claim it also.

Whether or not you amend your return, it's important to make the correct accounting entries to remove the stock and recognize the loss in order to keep all your member account information accurate.

Laurie Frederiksen
Invest with your friends!
www.bivio.com

Become our Facebook friend! www.facebook.com/bivio
Follow us on twitter! www.twitter.com/bivio
Follow Us on Google+


Click here to
Subscribe to the Club Cafe email list. Click here to Unsubscribe