Income Taxes and Record Keeping ( tax ) Message Board

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Strategies & Market Trends : Income Taxes and Record Keeping ( tax )

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To: RavMan who wrote (1592)	12/11/1998 6:15:00 PM
From: Colin Cody	Read Replies (2) of 5810

The FMV ie. fair market value of stock is 0 currently This "trick" I mentioned only works if the stock has value. If it is worth ZERO, it is worthless. If it is worthless then a taxpayer must write 100% of it off in the very year it actually became worthless. Earlier I believe you said it might be worth something big in the future. That by definition may mean it is not worthless now. When you say mechanical transfer does that mean that I can write a letter to my broker and ask him to transfer shares to his(my non related friend) account. YES, you should call and discuss this first with your broker. Not the TAX details, just "how do I get you to take 1,000 shares of WXYZ out of my account and put them into Ms. Sally Smith's account, also held at your firm?" You should be told to address a letter to the brokerage instructing you to provide both account numbers and asking them to make the transfer of the shares. A firm like Ameritrade will charge you $15 for this service. Most others will do it for free. Also when you say paid compensation do you mean the money I paid to buy those securities? No I mean your friend MUST pay you for the shares he purchases from you. That price should be the FMV. The fair market value might be $1 for the whole lot. "You must [enter into a] transact[ion]. [A] bona-fide arm's-length sale of [your] shares. [These shares must] includ[e] paid [paid to you by your friend] compensation [for the shares sold at FMV]..." The payment should be by personal check and it should be separately deposited into your personal checking account. Yes even if it is one whole dollar. This is to prove the date that transaction happened. Colin

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