Tax Q&A;: Worthless Stock
This daily tax season column publishes tax questions from readers answered by local members of the California Society of Certified Public Accountants. Questions and answers will be posted on The Times’ Web site, https://www.latimes.com/taxes, as they appear.
Tax Q&A;: Worthless Stock
Q: I own shares of a bankrupt company that no longer trade on the market. How can I claim a capital loss for these shares?
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A: Stock that has no value and is no longer traded can be claimed as a capital loss on Schedule D of your tax return.
You have to take the deduction in the year that the stock became worthless; if the company went bankrupt before 1998, for example, you must file an amended tax return to take advantage of the write-off.
Report the sale date as Dec. 31 with a $0 sale price. This will produce a capital loss to the extent of your cost. In case of audit, keep any documents that show when the stock became worthless, such as bankruptcy documents and brokerage statements.
--Steven J. Duben, CPA
Encino
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