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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.

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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey 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.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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