Rev. date: 12/21/2012
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.
The worthless securities are:
- Treated 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.
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