Losses on worthless securities are reported on Schedule D, just as if you had sold the security, only your selling price is zero.
You can recognize a loss on a security only in the year it becomes completely worthless. Even if a stock has been de-listed by an exchange, it may still have some value. Generally, there needs to be objective, irrefutable proof that the stock is worthless, such as an adjudication in bankruptcy, before taking a loss on worthless shares.
