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Losses (Homes, Stocks, Other Property)

Question: I own stock that became worthless last year. Is this a bad debt? How do I report my loss?

Answer:

If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. A stock or other security is treated as becoming totally worthless when it has no value and you must abandon it. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

  • Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year.
  • Report worthless securities on Form 8949 (PDF), Part I, line 1, or Part II, line 3, whichever applies. Indicate this as a worthless security deduction by writing "Worthless" in the applicable column of Form 8949.

 

Additional Information:


Category: Capital Gains, Losses and Sale of Home
Subcategory: Losses (Homes, Stocks, Other Property)

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The OMB number for this study is 1545-1432.
If you have any comments regarding this study, please write to:
IRS, Tax Products Coordinating Committee
SE:W:CAR:MP:T:T:SP
1111 Constitution Avenue NW
Washington, DC 20224