Claiming losses after the Enron bankruptcy

Q: I have a DRIP [dividend reinvestment plan] with Enron and have about $1,300 invested. Does it make sense to sell Enron and use the $1,300 as a tax loss? Since I'm in the 30.5 percent tax bracket, I figure it would be worth a bit less than $400 in tax savings.

J.F., via e-mail

A: "Now that Enron has declared bankruptcy, it looks like common shareholders, including DRIP participants, will probably be left with little or nothing," says Charles Carlson, editor of the "DRIP Investor" newsletter.

Enron DRIP participants have three main options, says Mr. Carlson:

1. Wait until the bankruptcy is adjudicated and, assuming the stock is deemed worthless, claim that loss on that year's tax forms. (Tax losses can be used to offset gains.) But waiting for a final adjudication could take a year or more, Carlson says.

2. Sell the shares through Enron's transfer agent. But you could face a charge for the sale, reducing any amount you might get back.

3. Ask Enron to send you a stock certificate for the value of your shares. Then sell the shares through a broker. Again, there could be a small commission charge.

Carlson, for his part, finds Nos. 2 and 3 most appealing. "I don't see much in the way of a rebound for Enron stock at this time. I would take the tax loss," he says.

Q: I recently sold shares in a Lucent Technologies DRIP plan. Since the stock is way down in value, I can take a large tax loss. But Lucent's transfer agent charged me a $15 fee. That hardly seems fair, since the stock has fallen in value.

Name withheld, New York

A: When buying into a DRIP plan, "always check on any costs that may be associated with a potential sale of the stock," warns Carlson.

Q: I am thinking of subleasing my rental apartment. If something goes wrong with the apartment, who is responsible - me, or the subtenant? Can I get my security deposit back at the end of the lease?

M.S., Los Angeles

A: Subleases are generally governed by the terms of the lease, but "you must also get landlord consent in Los Angeles," says David Chung, president of Remax Bee Select Inc., a real estate firm in Los Angeles.

Responsibility for the apartment resides with the original tenant, who would get the security deposit back, he says.

Questions about finances? Write:

Guy Halverson

The Christian Science Monitor

500 Fifth Ave., Suite 1845

New York, NY 10110

E-mail: halversong@csps.com