topic Are stocks lost due to a reverse stock split considered sold for tax purposes in Get your taxes done using TurboTax

Are stocks lost due to a reverse stock split considered sold for tax purposes

tec9265 — Mon, 03 Jun 2019 20:15:36 GMT

Can the loss be reported as a stock sale?

No a reverse split is not a sale. The stock is still wort...

jtax — Mon, 03 Jun 2019 20:15:37 GMT

No a reverse split is not a sale. The stock is still worth the same you just have fewer shares. There is no economic change. Same thing with a forward split.

Thank you, jtax. However, the value has changed signific...

tec9265 — Mon, 03 Jun 2019 20:15:39 GMT

Thank you, jtax. However, the value has changed significantly. It was a 1 for 15 reverse stock split, which was worth almost $500. Now it is worth only $25. That's why I was asking if I can count it as a sale for $475 on my tax return. Please reply. Thank you.

A reverse stock split reduces the number of shares and in...

KennethB — Mon, 03 Jun 2019 20:15:41 GMT

A reverse stock split reduces the number of shares and increases the share price proportionately. For example, if you own 10,000 shares of a company and it declares a one for ten reverse split, you will own a total of 1,000 shares after the split. A reverse stock split has no effect on the value of what shareholders own. Companies often split their stock when they believe the price of their stock is too low to attract investors to buy their stock. Some reverse stock splits cause small shareholders to be "cashed out" so that they no longer own the company’s shares, an example of which would be fractional shares.

When a stock split results in the shareholder owning a fractional share the company may distribute the value of that partial share to the shareowner in cash. The value of that partial share is compared to the cost basis of the same share portion to determine if there is a capital gain or a capital loss for tax purposes.

For example, if you own 10,000 shares of a company and it...

Hal_Al — Mon, 03 Jun 2019 20:15:43 GMT

For example, if you own 10,000 shares of a company and it declares a one for ten reverse split, you will own a total of 1,000 shares after the split.
If you paid $5,000 (for example) for those 10,000 shares, you had a cost basis of $5000 or 50 cents a share. For the 1000 shares you now have, you still have a cost basis of $5000, but it's now $5 per share.

Re: A reverse stock split reduces the number of shares and in...

Brandylove — Mon, 27 Jul 2020 11:18:29 GMT

I had 40000 shares of a Chinese co. Called CHOP. It was reversed to 4000 AND the price of 1.50 was ALSO reduced to .15 cents. A total scam. I lost a large sum. I still have the 4000 shares. How do I claim this loss? Thank you, Ted

Re: A reverse stock split reduces the number of shares and in...

Hal_Al — Mon, 27 Jul 2020 11:25:44 GMT

You cannot claim the loss until you actually sell the shares, or they become totally worthless. As long as they have some value, you have only an unrealized loss. You cannot claim a tax loss until you "realize" the loss.