A stock is worthless if it has no present value and no reasonable prospect of future value. See Wagner v. U.S., 2003 WL 691029, at *4 (M.D.Fla. Jan. 21, 2003) (citing Miami Beach Bay Shore Co. v. C.I.R., 136 F.2d 408, 409 (5th Cir. 1943)). On page 14 of its initial order, the bankruptcy court referred to the amount loaned by Oxley as $13 million, but it correctly identified the amount as $9.5 million on page 20 when using it to reduce Steffen's basis in the Bicoastal stock.
Furthermore, if a taxpayer's prospect of recovery was simply unknowable at the end of the tax year at issue, then the taxpayer will not be entitled to take the theft loss deduction that year. See id. at 1418; Wagner v. U.S., 2003 WL 691029, at *2 (M.D. Fla. Jan 21, 2003), aff'd, 90 Fed. Appx. 387 (11th Cir. 2003). "`A reasonable prospect of recovery exists when the taxpayer has bona fide claims for recoupment from third parties or otherwise, and when there is a substantial possibility that such claims will be decided in his favor.
In applying the Jeppsen case, the district court in the Middle District of Florida recently held that the taxpayers had failed to sustain their burden that they were entitled to a worthless stock deduction for a given year. In the case of Wagner v. United States of America, 2003 WL 691029 (M.D. Fla. 2003), the taxpayers/shareholders sought to deduct the loss they sustained when their corporation dissolved in the year 1994 pursuant to 26 U.S.C. ยง 165(a) and (g). In opposition, the government contended that the taxpayers had not satisfied their burden and the district court agreed.