My good friend Georgia from Reston, VA, had the misfortune of having TWA go bust on her! She lost $32,000 in TWA stock.
My question is this: Can she spread out that tax loss over a few years? If she can do that, for how many years can she use this tax loss?
Stewardesses are a varied lot, and there's a few that DO raise your eyebrows with their wildness. Georgia, however, is a worthy, hard-working individual. She got her Master's Degree in Architecture while flying for TWA. Thus, I will appreciate any info you can give me that will help her. A quick call to a sharp accountant will provide the answers and the guidance she needs!
This is important! It's $32K! So I do want to thank you in advance for your help in this regard!
It may not be as simple as the others have put it. I believe that TWA is trading on the OTC BB as TWAIQ.OB at about 10 cents a share. If she still holds the shares, she needs to sell them to establish the loss, and it can't be written off until next year's taxes. This loss will be recorded on Schedule D. If she was unfortunate enough to have bought some shares within one year of selling them, she will have to split the loss up into long term and short term. When she works through Schedule D, it will work out that only $3000 can be deducted immediately, and the rest will be called a capital loss carryforward. In the following years, she enters the capital loss carryforward into Schedule D, and it will give her a new $3,000 deduction and reduces the carryforward by the same amount. This will go on for about ten years until it is eaten up. Also, she will have to use the 1040 long form all of those years.
Here's my amateur advice. If she still holds the shares, she should sell them. She also needs to gather up all the receipts of what she paid for the stock. This may a serious challenge in itself if it was from payroll deductions over a number of years. Hope she saved the paperwork! Then next year, go to HR Block and let them do the work, that's what they're good at.
If these shares were held in an 401K or IRA, then all of this is moot. You can't deduct losses in these accounts and she would be SOL.
Thanks for the info! I will forward it to Georgia tonight! Boy, I knew she had shares of TWA, but not that much. I almost flipped when I heard the amount.
I've stayed in Georgia's house in Reston, VA, and I know the area around there. IMHO, it's a very nice place to live. Reston is one of the few planned communities in the US. So the houses are surrounded by plenty of trees. Actually, as you drive around the area, you get the feeling that you are in a forrest, not an urban area. Nice!
Like I said, Georgia is an architect with connections to people that are into city and urban planning. She was told to check out Reston as a place to live, and she did! Well, I think she found a terrific place to live and work. Now, your opinion may vary. So I suggest that you check it out yourself.
Nowdays, that area is becoming a mini-Silicon Valley with lots of computer cos establishing themselves there! That is both positive and negative! So that's something to consider also. For example, if you buy a house there, it will go up in price in due time. That's always a positive. Right?
I hope this helps. Once again: Thanks for the tax info!
So I'm not the only with this problem (sarcasm) She can lose 3k a year in capital gains write off on stocks. There is a form in your tax booklet that has a carryover. When she feels out her form d, it will tell you where to go if your loss is over 3k. Better luck this year. I'm sure hoping