How Do I Report Worthless Stock ?

Worthless stock is reported as a capital loss on Form 8949 with sale proceeds of zero.

The securities must really have no value. Stocks that trade for fractions of pennies on the pink sheets are not considered to be worthless.

When a stock becomes worthless, its ticker symbol is removed from all exchanges. Brokers will typically let you dispose of the worthless securities from your account through a sales transaction at no charge.

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Worthless securities are reported on Form 8949 in the tax year that they lose all value. Should you forget to report the loss in the correct year, you cannot include it on a later return. You need to amend the prior return in order to claim the loss.

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