Bed Bath & Beyond / Rite Aid Tax Loss: The "Abandonment" Strategy Explained

You have a stock in your portfolio worth $0.00. You can't sell it because there are no buyers, so you think you can't claim the tax loss. Wrong. The IRS allows you to "Abandon" the security to trigger a full capital loss deduction.

As The Finance Observer, I’ve performed a forensic review of IRS Section 165(g) (Worthless Securities). In this video, we dissect the difference between Chapter 11 (Reorganization) vs. Chapter 7 (Liquidation), how to force your broker to issue a "Penny for the Lot" trade, and the incredible 7-Year Statute of Limitations that lets you amend old tax returns for missed losses.

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FORENSIC BREAKDOWN:

0:00 The "Zombie Stock" Problem: Why you can't sell a $0 asset

1:40 The IRS Rule: "Wholly Worthless" vs. "Mostly Worthless"

2:20 The Trap: Why Chapter 11 Bankruptcy doesn't trigger a tax loss

3:15 The Solution: The "Abandonment Doctrine" (Liquidate for $0)

4:10 Filing Form 8949: How to enter "WORTHLESS" as the sale date

5:00 The Tax Coupon: Offsetting Gains + $3,000 Ordinary Income

5:50 The "Time Machine": The Special 7-Year Amendment Rule (Section 6511)

DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. Declaring a security worthless is a final irrevocable act; consult a qualified tax professional.

Видео Bed Bath & Beyond / Rite Aid Tax Loss: The "Abandonment" Strategy Explained канала The Finance Observer