Question

Your firm’s client, Samuel Silverstone, invested $80,000 in the stock of a new start-up company that opened a chain of restaurants that specialized in exotic foods called “Gnu-Shu.” As might be expected, this venture has not been very successful and Samuel’s stock has lost its value. Samuel knows that worthless securities are normally treated as a short-term capital loss (STCL), which means the $3,000 annual maximum deduction and other limits apply. While talking to one of his co-investors, he discovers that her tax advisor (Eric McShamus) contents that if a taxpayer “abandons” a security it is not subject to the STCL treatment. Samuel is very excited about this and is anxious to asset that he “abandoned” the Gnu Shu stock so that he can deduct the entire $80,000 loss in the current year. A. Regulation citation and date? B. Do you need more information? C. Conclusion? Can he deduct the $80,000?

Answer 1

regarding question no.1:

Regulation that applies here is area 165g. This area manages worth less securities.These useless securities are to be dealt with as sold on the most recent day of the assessable year.

regarding question no.2:

Data required is whether these offers can be sold in the market at an even a lesser esteem. In such case, the offers can't be dealt with as worth less. In this way, it is to be resolved that these offers does not have trade an incentive by any stretch of the imagination.

regarding question no.3:

Conclusion is that the securities can be dealt with as worth less securities and the loss can be dealt with as normal loss and not as a capital loss. Henceforth, the aggregate sum of speculation less any protection accessible for the loss can be asserted in the wage assessment form for the year.