I understand that Enron was considered worthless in 2004. I just inherited Enron stock from my father in 2008. How do I declare it worthless? Can I still go back and declare it worthless for 2004, even though I did not own it yet? Can I declare it worthless in 2008 when I did own it?
You won't be able to deduct the loss yourself because you didn't own the stock when it became worthless. But your father's estate can file an amended return for 2004 to claim the loss. Unlike most amended returns, which must be made within three years after the tax-filing deadline, you have up to seven years to amend a return to report a worthless stock.
Because your father has died, the process does get complicated -- the amended return would probably need to be filed by the executor of the estate, with the refund coming to the estate. Whether it's worth the effort depends on how much money is involved. If it's a big loss but your father also had a big gain to offset that year, then one amended return for 2004 can do it. But if your father had no net gains to offset in 2004, then the executor may also have to file amended returns for 2005, 2006, 2007 and claim up to $3,000 in losses each time. Complicated, yes, but it could put some nice cash in your pocket.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For more information about capital gains and losses and other investing-related tax issues, see Investor Tax Tips.
-
December 31 RMD Deadline: What to Know and What to DoTax Deadlines The year-end deadline for required minimum distributions is critical for many retirees.
-
Top Tax Stories of 2024 and Key Changes to Watch for 2025Tax News The Kiplinger tax team is looking back at popular tax stories and looking ahead to potential tax changes in the new year.
-
Getting Out of an RMD Penaltyretirement When your brokerage firm miscalculates your required minimum distributions, you have recourse.
-
Borrowers Get More Time to Repay 401(k) Loans
retirement If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law.
-
It’s Not Too Late to Boost Retirement Savings for 2018
retirement Some retirement accounts will accept contributions for 2018 up until the April tax deadline.
-
How to Correct a Mistake on Your RMDs from IRAsretirement If you didn't take out the correct required minimum distribution because your brokerage firm made a mistake, the IRS may show some leniency.
-
Making the Most of a Health Savings Account Once You Turn Age 65
Making Your Money Last You’ll face a stiff penalty and taxes if you tap your health savings account for non-medical expenses before the age of 65. After that, the rules change.
-
Using a 529 Plan for High School
529 Plans You’re now able to withdraw up to $10,000 tax-free from a 529 plan each year for K-12 tuition.
-
Reporting Charitable IRA Distributions on Tax Returns Can Be Confusing
IRAs Taxpayers need to be careful when reporting charitable gifts from their IRA on their tax returns, or they may end up overpaying Uncle Sam.
-
Make the Most of the New Military Retirement Plan
retirement The government is offering a new retirement option so that service members who leave the military before qualifying for a pension can still receive some benefits.
