Idearc Shareholders Will Probably Qualify For A Worthless Stock Loss Deduction
Idearc Worthless Stock - Overview
Most stock losses occur when you sell a stock for a loss. A worthless stock loss happens when you hold a stock when it becomes worthless. Worthless means worthless! If a share of stock is worth $0.001, it is not worthless. If it is worth zero, it is worthless.
You can deduct a worthless stock loss as a Long - Term Capital Loss.
The amount of the loss is your tax cost basis in Idearc. Our software can help you with that. Since there have been many splits and some spin-offs that is good news. Without knowing your cost basis, you have no worthless stock loss deduction.
The timing of the worthless stock loss can be tricky.
Announced 3/31/09:
Idearc filed for bankruptcy protection.
May, 2009 FAQ:
In May, 2009, Idearc published a FAQ document that indicated that current shareholders will get nothing. This indicates that at some time the Idearc shareholders will qualify for a worthless stock deduction. The current thinking is that the bankruptcy will be completed in the third quarter of 2009. (It didn't happen in the third quarter).
September, 2009 FAQ:
In September, 2009, Idearc published a FAQ document that the bankruptcy will probably be completed in the fourth quarter of 2009. As of 10/5/09, the Idearc price is around $0.02. Thus, it does not yet qualify for worthless stock status. If the bankruptcy steps are not completed in 2009, Idearc will not qualify for a 2009 worthless stock loss deduction.
Cost Basis Calculation:
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Timing of a Idearc Worthless Stock Loss
You can deduct your worthless stock loss in the year the stock becomes worthless. Sometimes that can be tricky. In the case of Idearc, the stock clearly became worthless in 2009 when Idearc bankruptcy steps have been completed.
If Idearc becomes worthless in 2009, report the loss on your 2009 Form 1040, Schedule D which is due April 15, 2010. If you don't report your worthless loss on your 2009 return. You, generally, have until April 15, 2013 to report the worthless 2009 on an amended 2009 return.
The law is very specific on the timing issue. If Idearc becomes worthless in 2009, a 2009 Idearc worthless stock loss cannot be deducted on any year's return other than your 2009 return. Idearc's FAQ from management indicating that Idearc pre bankruptcy shareholders are most likely holding worthless stock in 2009.
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