Is the loss on the sale of my home deductible?

Answer:

Maybe. A loss on the sale or exchange of personal use property, including a capital loss on the sale of your home used by you as your personal residence at the time of sale, or loss attributable to the part of your home used for personal purposes, isn't deductible. Only losses associated with property (or a portion of property) used in a trade or business, losses resulting from a transaction entered into for profit (for example, a loss on the sale of stock), or casualty losses (until 2025, only losses resulting from federally declared disasters) are deductible.

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. Worthless securities also include securities that you abandon. 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.
  • 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). 
  • Report worthless securities on Part I or Part II of Form 8949, and use the appropriate code (see the Instructions for Form 8949) for worthless security deduction in the applicable column of Form 8949.

 

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