As the end of the year approaches and tax considerations become top of mind, many investors start thinking about writing off their losses. SRS Acquiom is sometimes asked to purchase residual interests in unsuccessful investments, so its clients can realize losses for tax purposes in a given calendar year. The ability to realize the tax loss in the current year can be far more valuable than any potential upside, and it can eliminate further carrying costs.
An IRS audit may require proof that the stock was sold at a loss, and selling worthless or downgraded shares for $1 is frequently the best solution if an orderly wind down process has not been completed. When a wind down is planned, selling residual interest can help investors accelerate a loss for tax purposes in a given calendar year.