Thanks for pointing me in the right direction @Rick19744 . This sounds like something that fits my situation, just need to determine tax year of the qualifying criteria.
A couple clarifying points and a follow-up question below:
- I had multiple grants in 2020, 2021, and 2022, all with a vesting schedule of 1/3 of shares every 12 months. By end of 2023, 65% of the shares from these grants were vested and the remaining were unvested.
- Regarding the identifiable event:
- The company filed for Chapter 11 Bankruptcy (Reorganization) in July 2023
- The company converted from Chapter 11 to Chapter 7 Bankruptcy (Liquidation) in October 2023
- The Chapter 7 Bankruptcy court case is still ongoing, with a likely conclusion/closure in March 2024
- Regarding the year the capital asset is completely worthless:
- The stock was delisted from Nasdaq in July 2023
- The stock price continued trading on the OTC markets and dropped to $0.001 in October 2023.
- The stock price did not reach $0.000 until January 2024
- No letter has been sent to stockholder (to my knowledge) regarding the conclusion of Chapter 7 Bankruptcy and any potential proceeds as of today.
Follow-up questions:
- With the above information, would you consider the identifiable event in July 2023 (Chapter 11 filing), October 2023 (Chapter 7 conversion), or still to come in 2024 (Chapter 7 conclusion)?
- With the above information, would you consider the asset to be deemed worthless in July (delisted from Nasdaq), October 2023 ($0.001 share price), January 2024 ($0.000 share price), or still to come in 2024 (Chapter 7 conclusion)?
Thanks so much in advance for the thoughts and I recognize that posts in a forum such as this do not constitute tax advice.
