QUESTION: Can I claim a loss for a stock that went bankrupt in 2000? I have never filed anything regarding this stock.

ANSWER: It sounds as if you may have waited too long to claim a loss. The two keys to answering your question about stock losses are what year the stock became worthless and when taxes were paid for that tax year. If the stock became worthless in 2000, it likely is too late to file a claim for the loss.

Stocks that become completely worthless during a tax year are treated as though they were sold on the last day of the tax year. If a loss for a worthless security is not claimed on the original federal tax return for the year it becomes worthless, a claim for a credit or refund can be filed using Form 1040X, Amended U.S. Individual Income Tax Return.

But the amended return must be filed within seven years from the date your original return had to be filed, or two years from the date the tax was paid, whichever is later.

This seven-year time frame to file a refund claim due to worthless securities (or bad debts) is much longer than refund claims in general.

Normally, refund claims must be filed within three years from the date a return is filed, or two years from the date the tax is paid, whichever is later.

For more information about worthless securities, see IRS Publication 550 ("Investment Income and Expenses"). The booklet and Form 1040X are available online at www.IRS.gov, or you can request copies by mail at 800-TAX-FORM (829-3676).

QUESTION: I am starting to invest in the California 529 savings plan for my granddaughters' college educations. However, I'm not sure what state tax benefits apply to my annual contributions. Do I get a state tax deduction or tax credit at the end of the year? Thank you.

ANSWER: Your granddaughters are lucky to have such a thoughtful grandparent who is already planning for their college expenses.

Unfortunately, California does not have a year-end tax credit or state tax deduction for contributions made to its ScholarShare 529 college savings plan.

However, once someone is enrolled in college, qualified withdrawals from a 529 plan are not taxable on state or federal taxes. That means distributions used for qualified education expenses will not be included as part of a student's gross income.

For more information on California's ScholarShare savings plan, go to: www.scholarshare.com.