I have shares of an S Corporation that were purchased in 2010. In 2010,11, and 12 the company had unallowed losses that were carried over. The stock was purchased for $10,000; the total unallowed loss for the three years was $14,000.
In 2019, the company abruptly stopped all operations and subsequently filed for bankruptcy. There is no chance of any compensation to the stockholders.
Usually I can figure out new situations, but this one is stumping me. IRS Topic 425 says that any previously disallowed passive activity loss may be deducted in full in the year the interest is disposed. It looks like Schedule D, Form 8949, and Schedule E can all come into play with this. Can anybody give me the right path to follow for this scenario? Thanks in advance.
