Stock Warrants That Expired Worthless

[anthony340]

 A stock warrant I owned expired worthless in September 2019. I called my brokerage firm to request to have these shares removed from my account as non-marketable. And once the shares are removed the losses will be realized as a capital loss.  Correction: I did receive a 1099B form from them. But it showed only dividends I received from another stock. It did not record on the 1099B about the stock warrants. This was also confirmed by TDAmeritrade while I spoke to them by phone. They indicated to me that when this stock warrant expired it automatically was removed from my brokerage account. They told me they did not know how this transaction should be handled. That I needed to talk with a tax expert. 

So how do I write off these worthless warrants so to claim a capital loss for tax year 2022?

                                                                                Thank You,

                                                                                      Dale

[Mike9241]

there are many ways you could acquire warrants. in some cases you pay nothing ($0 tax basis)  in others you do. in any case, if there is a tax basis the loss needed to be taken in 2019 when they expired worthless. 

[NCperson]

@anthony340   you would need to amend your 2019 tax return. The deadline is July 15, 2023 to do that. 

How much did you pay for the warrants?  if they were just given to you (i.e. you didn't pay anything), there is no loss to report. 

if the loss was $3000 more than the capital gain you reported in 2019, then there should be a carryover loss and that may cause amendments to 2020 and forward returns to consume the carryover. 

[Mike9241]

most likely if they were worthless in 2019, the "disposition" would have been reported on the 2019 1099-B. no double-dipping. 

[anthony340]

I made a correction to my original post. I did receive a 1099-B from them. It only showed dividends I had received from another stock. It did not record anything about those stock warrants. This was also confirmed from TDAmeritrade as I spoke to them on phone.

[anthony340]

 What happen when the 3-year statute of limitations run out. Do I miss out on this capital loss completely?

[NCperson]

@anthony340 - What begs your question?   

The deadline to submit a tax return (or an amendment)  for the purpose of obtaining a credit is three years after the due date of the original return.  So unless you originally filed for an extension of the 2019 tax return, the due date that year was July 15, 2023 (it was delayed due to the pandemic from April 15). 

if you owe taxes, there is no deadline, you always owe until the liability is satisified. 

if you fail to claim the carry loss forward via an amendment of you 2019 tax return prior to July 15, 2023, I can't imagine you are able to take the adjustment in a future year.  The IRS would have no record of it on your 2019 tax return, so why would they accept it in 2020 (or any future year).

[anthony340]

I didn't claim it then because my 1099B never showed it.  So how could I claim this lost then if it's not reported on my 1099B. I just assumed once these warrants expired worthless that was the end of them. And so thought that was why they we not reported on my 1099B.  I then completely forgot about them. I was having other worthless stocks removed from my account.  Which allowed me to claim them as losses on my 2022. These went over 8 years.  Thats when I made aware to this broker about the stock warrants. And ask if I could do the same for the warrants. He found no answer except for me consult a tax expert.  The conclusion from others is that I need to amend my 2019.  I didn't own any tax for that year.  So, an amendment I will follow to do

[NCperson]

that amendment will protect your ability to amend your 2020 and 2021 tax return to preserve any tax loss carryforwards.

if the warrants were given to you without you paying for them and they expired worthless, then that is the end of it.  Nothing more to do.