ASK KIM
Writing off Worthless Stock
by Kimberly Lankford

I have about 1,000 shares of Enron stock. I understand that the stock must be considered worthless to write off the entire loss. How do I find out if the IRS considers Enron stock worthless?

You're in luck (sort of). Enron stock was officially canceled on November 17, 2004, when the company went into bankruptcy. On its Web site, the company states that "we do not expect that distributions will ever be made to the former holders of Enron Corp. stock." That should be enough to satisfy the IRS.

To claim the stock loss, report it on Schedule D as if you had sold it for $0 on December 31, 2004 (write "worthless" in the section where you are asked for the sale date and selling price). Your loss is the amount you paid for the stock.

You must file your loss for the year in which the stock became worthless. So unless you took an extension on filing your 2004 tax return, you'll need to file an amended return 1040x.