When is stock worthless

I own stock that became worthless last year. Is this a bad debt? How do I report my loss? How to Write Off Worthless Stock. Oct 30 If you have questions related to the tax treatment of stock sales, contact the Experts at Henssler Financial: Experts Request Form Email: experts henssler. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed.

The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations.

Here is some additional info from the Frequently Asked Questions page on irs. Answer If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt.

Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year. You must determine the holding period to determine if the capital loss is short term one year or less or long term more than one year.

Indicate as a worthless security deduction by writing Worthless in the applicable column of Form This author does not have any more posts. Related Blog Posts January 27, The provisions of this section may be illustrated by the following examples:. The loss so sustained by X Corporation shall be considered a long-term capital loss under the provisions of section 4 , since the stock was held by that corporation for more than 6 months. The loss may not be deducted under section as a bad debt.

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