The IRS also extends the wash sale prohibition to closing short sales. Securities with a value that expires at a specified time in the future. The time values of the securities deteriorate as their termination date approaches. Examples of wasting assets are option contracts, warrants and rights. Thus, they are subject to depreciation.
Examples are oil and gas extractions.
A security may be on a watch list for various business or regulatory reasons. Watered Stock Stock representing ownership of overvalued assets whose total worth is less than their invested capital. The condition of overcapitalized corporations may result from inflated accounting values, operating losses or excessive dividends. Some negative characteristics of watered stock are the inability to recoup full investment in liquidation, insufficient return on investment, low market value and the firm's reduced ability to capitalize on growth opportunities. The customary method of correcting the situation is for a corporation to either increase its assets without increasing its outstanding shares or reduce outstanding shares without reducing assets.