Can I write off a loss on an investment in a company that is still going through bankruptcy?
Here's the situation: I had purchased uninsured CDs/Notes in ABFS (American Business Financial Services) they are still going through bankruptcy proceedings (they declared bankruptcy in 2005). I expect to receive pennies on the dollar when it comes time for a settlement. Can I write any/all of my investment off now, and then declare any settlement money as new income, or do I need to wait until the bankruptcy is settled, and I'll know exactly what my investment is now worth and how much I lost?
- Anonymous1 decade agoFavorite Answer
Dear J: Could not believe a company could be in B/K for 4 years until I read the trails of ABFS! WOW! Yes you must wait until some determination is made on the value of your investment. If it is declared worthless you can write off the entire amount subject the annual limitation of $3000.
This advice was prepared based on our understanding of the tax law in effect at the time it was written as it applies to the facts that you provided. Click on my profile to read more. Errol Quinn Enrolled Agent
- ObamavengerLv 71 decade ago
There is no loss until you actually realize it. If you could sell the near worthless notes you could should a loss after the sale otherwise you will have to wait until you get your pennies then write off the difference.
- Anonymous1 decade ago
Only if you can sell the notes to someone else. Even pennies on the dollar means it has value--and you can't write it off unless you sell or it's worthless.
- JudyLv 71 decade ago
You have to wait until you sell it or it's formally declared worthless.