That Washington Mutual stock loss can help on your taxes
— -- A: Washington Mutual has been one of the most dramatic casualties from the credit crunch.
Prior to WaMu's failure and $1.9 billion firesale to JP Morgan Chase this year, the company was the largest thrift in the U.S. But WaMu's extension of credit to homebuyers unable to repay the loans and bets on the mortgage market lead to its demise.
At its height in 2006, shares of WaMu traded for as much as $45 a share. Following the sale, shares collapsed to around 8 cents now. The sale to JP Morgan Chase wiped out stockholders like yourself and most of the bondholders as well.
So to answer your question, yes, you might consider the $5,000 loss a way to reduce your tax bill. You can use the loss to offset capital gains you might have, and if you don't have $5,000 in losses, you can offset up to $3,000 a year in ordinary income until your loss is used up.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.
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