We have about 5% ownership of a small company where most shareholders are family members or friends. The stock value has decreased dramatically. I would like to sell my stock and take loss. Not many people know the company except the family and friends who are already shareholders. May I sell to some of the family members and take loss? Even if I surrender my shares to the company, it seems that it will benefit all shareholders as their actual ownership will increase proportionally. Can I surrender my shares, "benefit" those family members who are majority owners, and take loss?
Alternatively, can I sell to relatives who are not already a shareholder of this company? Who among the relatives I can sell the shares to and still take loss in my tax return?
2007-12-02 17:04:12 · 4 answers · asked by JayH 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
This falls under related party rules...(too bad) IRS publication 550.
Losses on Sales or Trades of Property
You cannot deduct a loss on the sale or trade of property, other than a distribution in complete liquidation of a corporation, if the transaction is directly or indirectly between you and the following related parties.
Members of your family. This includes only your brothers and sisters, half-brothers and half-sisters, spouse, ancestors (parents, grandparents, etc.), and lineal descendants (children, grandchildren, etc.).
A partnership in which you directly or indirectly own more than 50% of the capital interest or the profits interest.
A corporation in which you directly or indirectly own more than 50% in value of the outstanding stock (see Constructive ownership of stock, later).
A tax-exempt charitable or educational organization that is directly or indirectly controlled, in any manner or by any method, by you or by a member of your family, whether or not this control is legally enforceable.
2007-12-02 17:08:56 · answer #1 · answered by Anonymous · 1⤊ 0⤋
1
2016-12-24 06:23:27 · answer #2 · answered by Anonymous · 0⤊ 0⤋
No.
I order to take the loss, you would have to sell to an unrelated party.
No losses are allowed between related parties.
2007-12-03 00:54:53 · answer #3 · answered by Wayne Z 7 · 0⤊ 0⤋
no, no related party losses. they are disallowed as deductions.
2007-12-02 17:08:10 · answer #4 · answered by ChicagoMan 3 · 1⤊ 0⤋