Coping In Tough Times: Worthless Stock is, well, worthless
Every day this week, the Sun Sentinel will answer your questions about getting through the economic downturn. After that, we will publish tips every Wednesday in Your Money.
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Can I get a tax benefit out of a virtually worthless stock that I own?
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It won’t be easy.
The rule essentially is that the value of your stock or your bond has to go to zero in order to be written off.
“In the IRS’ view, if you can still sell it for two cents per share, that’s not worthless,” said Mark Luscombe, principal tax analyst at CCH, a Wolters Kluwers business.
Two ways to prove a security’s worthlessness: A bankruptcy case closes and common shareholders get nothing. Or, you ask a broker to sell it and there’s no market for the stock or bond.
If you can get that kind of proof, you could take a capital loss. Capital losses can be used to offset capital gain income. And if you don’t have any of that, you can use up to $3,000 in capital losses in any one year to offset ordinary income.




Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.