Monday, August 11, 2008

Sell Of Property

Worthless Securities:
Did you know that you can claim a capitol loss on a security, such as stocks, stock rights and bonds that become worthless during the year? The security is treated as if it had been sold on the last day of the year for purposes of determining whether your loss is short-term or long-term. You are permitted to claim the loss only in the year the security actually becomes worthless. However if you hold securities that are on the verge of becoming worthless, consider selling them and now and take your capitol loss in the new year you sell, rather than have to discover proof that securities have in fact become worthless. According to the IRS your the securities need to be sold to an unrelated buyer, otherwise your loss may be disallowed.

Non Business Bad Debt:

If you are owed money and you can no longer collect on that debt, you may be able to deduct the amount still owed to you as bad debt. If the debt came about from operating your trade or business, the bad debt deduction is an ordinary loss. An non business bad debt on the other hand can only be deducted as a short-term capitol loss. You are entitled to claim a bad debt deduction only in the year the debt becomes totally worthless. As a result, you should claim the bad debt deduction at the earliest time you believe the debt to be worthless.

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