Discussion:Loss on 401k stock i.e. mci

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Discussion Forum Index --> Consumer Questions --> Loss on 401k stock i.e. mci

KNAQ51` (talk|edits) said:

13 July 2006
I was an employee of MCI and most of my 401k funds were in MCI stock. I was told that I could deduct some of the losses on my 401k because of the MCI bankrupcy. I can't find any info other than I just lose. Any help?????

Tctaxservice (talk|edits) said:

13 July 2006
Here is a little help.

Copied from Pub. 575 page 20.

"Losses. You may be able to claim a loss on your return if you receive a lump-sum distribution that is less than the plan participant’s cost. You must receive the distribution entirely in cash or worthless securities. The amount you can claim is the difference between the participant’s cost and the amount of the cash distribution, if any. To claim the loss, you must itemize deductions on Schedule A (Form 1040). Show the loss as a miscellane- ous deduction subject to the 2%-of-adjusted-gross-income limit. You cannot claim a loss if you receive securities that are not worthless, even if the total value of the distribution is less than the plan participant’s cost. You recognize gain or loss only when you sell or exchange the securities."

Tdoyle (talk|edits) said:

13 July 2006
You can find additional information, as well as links to this publication at Publication 575. Many other publications are listed on the Forms & Pubs page which can be located on the white tabbed bar from the Main Page.

- Tim Doyle, TaxAlmanac Moderator - Talk to me 07:23, 13 July 2006 (CDT)

JR1 (talk|edits) said:

July 13, 2006
In other words, you can only deduct a loss IF you have made some taxable contributions somehow. That's not likely. Sorry.

Chase (talk|edits) said:

26 March 2007
What about losses on MCI which were NQ exercises back in 2000 whereby T/P received the stock, paid taxes on the ordinary income piece (because it was a non-qual), and then was left holding the bag? Can these be claimed as worthless stocks at this point? never claimed before. Same taxpayer has around $50 K in ESPP purchases of this stock -- purchased through the ESPP --- during the 90's --- never written off -- and wants to write off now as worthless. is this possible?

Kevinh5 (talk|edits) said:

26 March 2007
Need to be claimed worthless in the year they became worthless. Not now. Go back and amend.

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