A few comments:
- Taxpayer's are able to claim a worthless stock deduction
- In order to claim this deduction it must meet certain criteria
- Must be completely worthless; no partial deduction
- Should have some identifiable event; termination of business, liquidation, bankruptcy, etc.
- The taxpayer has the burden of proof
- The deduction must be taken in the year the capital asset is deemed completely worthless
- In a bankruptcy, sometimes there are proceeds that are paid out at a later date
- Sometimes companies come out of bankruptcy
- I would recommend that you get some type of letter from the company indicating that there will be no proceeds available for shareholder's; since most likely $$ will go to creditors
- So bottom line, you do have the ability to take a worthless stock deduction, but you need to be certain that all of the options to receive any $$ have been closed for shareholder's.
- If you decide to take the worthless stock loss, enter it on the form 8949 just as any other stock; proceeds will be zero and your basis will be what was included in your W-2. Reflect each year as a separate transaction.
- However, it is not clear from your facts if we are only dealing with 2020 since the 3-year vesting period has not occurred for any of the other years?
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
