How to claim tax loss on First Republic Bank stock after liquidation?
I stupidly held onto my First Republic Bank (FRC) stock until the very end, and now I'm sitting with a loss of about $19,000 after they liquidated the stock. I've been trying to research online what options I have for the upcoming tax season. Since the stock was basically seized and the company completely liquidated, can I take the full loss on my taxes? This year has been brutal financially, and I'm already looking at owing a significant amount in taxes. Any guidance would be really appreciated. Thanks in advance.
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Miguel Castro
Yes, you can claim a capital loss for the FRC stock. Since the stock became completely worthless when the bank was seized, this qualifies as a capital loss that you can claim on Schedule D of your tax return. You can use capital losses to offset capital gains, and if your losses exceed your gains, you can deduct up to $3,000 of the excess loss against other income. Any remaining loss can be carried forward to future tax years until it's used up. Make sure you have documentation showing your purchase price (cost basis) and the fact that the shares became worthless. You'll report this as a sale with $0 proceeds on your Schedule D.
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Zainab Abdulrahman
•Thanks for the info. I'm in a similar situation but have a question - do I need to get some kind of official documentation proving the stock became worthless? Or is it enough that it was widely reported in the news?
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Miguel Castro
•You don't necessarily need official documentation specifically issued to you. The FDIC seizure of First Republic Bank was a public event, so the IRS is aware of it. Having your original purchase statements showing your cost basis is the most important documentation. For your tax records, it's good to save news articles or official announcements about the bank failure and liquidation. This establishes the date the stock became worthless, which is important for determining which tax year you can claim the loss.
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Connor Byrne
I was also caught in the First Republic mess and found that taxr.ai was super helpful with figuring out how to correctly claim my losses. I was confused about whether to report it as a regular capital loss or as a worthless security, and their system analyzed my situation and walked me through exactly how to report it. Check them out at https://taxr.ai if you're still unsure about how to document everything. Saved me hours of research trying to figure out the correct tax treatment!
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Yara Elias
•Does taxr.ai actually connect you with a real tax professional or is it just an AI tool? I'm concerned about getting advice that might not be applicable to my specific situation.
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QuantumQuasar
•I'm curious how taxr.ai handled the timing issue. Did they recommend claiming the loss in the year the FDIC took over or when the final liquidation was completed? There seems to be conflicting info about this.
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Connor Byrne
•The system actually analyzes your specific tax situation rather than giving generic advice. It looks at your documents and provides personalized guidance based on your circumstances, not just general information. As for the timing issue, they specifically addressed this for bank failures. They recommended claiming the loss in the year when the FDIC declared the stock worthless, which was when they seized the bank and announced shareholders would receive nothing. They even provided references to the relevant tax code sections to back this up.
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QuantumQuasar
Just wanted to update - I tried taxr.ai after seeing the recommendation here and it was actually really helpful for my First Republic loss situation. The system walked me through exactly how to document my loss and even explained how to handle it differently from normal stock sales since this was a bank failure situation. They had a specific section about FDIC interventions and worthless securities. Definitely cleared up my confusion about the timing issue!
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Keisha Jackson
I also had FRC stock and was getting nowhere with the IRS trying to get clarification on how to properly claim my losses. After multiple failed attempts to reach someone, I used Claimyr (https://claimyr.com) and actually got through to a real IRS agent in about 15 minutes! You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent walked me through exactly how to document the loss on my Schedule D. Apparently there are specific rules for reporting losses from bank failures that are different from regular worthless securities. Without that call, I would have reported it incorrectly.
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Paolo Moretti
•Wait, how does Claimyr actually work? I thought it was impossible to get through to the IRS these days. Is this just paying someone to wait on hold for you?
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Amina Diop
•This sounds too good to be true. I've literally spent hours on hold with the IRS and never reached anyone. I'm skeptical that any service could actually get you through in 15 minutes. What's the catch?
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Keisha Jackson
•It uses a system that navigates the IRS phone tree and waits on hold for you. Once an agent picks up, you get a call connecting you directly to them. So yes, basically it handles the hold time so you don't have to sit there listening to the IRS hold music for hours. The system actually works because it's persistent and uses optimal calling patterns. There's no special "cutting the line" - they just handle the frustrating waiting part for you. I was skeptical too until I tried it and actually spoke with an IRS agent who answered my specific questions about the First Republic situation.
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Amina Diop
I have to eat my words. After posting my skeptical comment, I decided to try Claimyr anyway because I was desperate for answers about my FRC losses. To my complete shock, I got connected to an IRS agent in about 20 minutes. The agent confirmed that bank failures are treated as capital losses in the year the FDIC declares the stock worthless, and helped me understand exactly how to document it on my return. The peace of mind was worth it, and I saved literally hours of hold time.
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Oliver Weber
Don't forget that you can carry forward losses beyond the $3,000 annual limit against ordinary income. With a $19k loss, you'll be carrying forward for several years unless you have capital gains to offset. Keep careful records of how much you use each year so you don't lose track of your remaining loss carryforward.
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Ava Martinez
•Thank you - I hadn't considered the carry forward aspect. Do I need to file any special forms to track these losses year to year, or does the tax software typically handle this automatically?
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Oliver Weber
•Your tax software should track this for you if you use the same program year after year. However, I always recommend keeping your own records as well. You don't need a special form - just make note of your remaining loss carryforward on your tax return copy each year. The IRS requires you to apply capital losses in a specific order: first against capital gains (short-term against short-term, long-term against long-term), then against any remaining gains, then up to $3,000 against ordinary income. Any excess gets carried forward. It's worth understanding this so you can verify your software is handling it correctly.
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Natasha Romanova
What tax software are most people using to handle these bank failure losses? TurboTax was confusing me last year when I tried to enter some investments that went to zero.
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NebulaNinja
•I used H&R Block online last year for a similar situation and it handled it well. There's a specific section for worthless securities where you can enter the details. Just make sure you enter $0 for the sale proceeds and the date it became worthless.
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Amara Eze
I'm sorry to hear about your FRC loss - that's a significant hit. One thing I'd add to the excellent advice already given is to make sure you understand the wash sale rules don't apply here since the stock became completely worthless rather than being sold and repurchased. Also, if you have any other capital gains this year, this loss can directly offset them dollar-for-dollar, which might help reduce your overall tax burden. Even if you don't have gains this year, as others mentioned, you can deduct $3,000 against ordinary income and carry the rest forward. Since you mentioned already owing taxes this year, definitely consider whether this loss might change your estimated tax payment situation. The $3,000 deduction against ordinary income could reduce what you owe by several hundred dollars depending on your tax bracket.
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Nick Kravitz
•This is really helpful advice, especially the point about wash sale rules not applying. I hadn't thought about that distinction. Quick question - when you mention the loss could reduce what I owe by several hundred dollars, is that calculation just my marginal tax rate times the $3,000 deduction? So if I'm in the 22% bracket, that would be about $660 in tax savings from the ordinary income deduction alone?
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