Investors & landlords

If your stocks are truly worthless and you are abandoning all rights to them, then you claim the loss by entering them as a sale of stock with a sales price of $0 and the cost basis of what you paid for them. 

 To do this you will select the following:

• Federal
• Income
• Show More next to Investment Income
• Start next to Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B)
• Walk through the steps of entering a 1099-B with the information you do have.  You will need to select long term basis did not receive form 1099-B
• Enter $0 for proceeds and then your cost basis (number of shares x $2)
• Select I need to adjust my total cost basis and the select letter S for loss of worthless small business stock.
• Hit continue.

TurboTax will likely tell you that you will need to mail your paper copy to the IRS.  This will likely delay processing of your return.  Since you do not have a 1099-B, you can mail a copy of your stock certificate, evidence of when it became worthless, evidence of your basis (ie. proof it was in lieu of payment). 

If it was not for services or as any type of payment, then no, you would not be able to claim it as worthless since you did not give anything to get anything from it. 

If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Worthless securities also include securities that you abandon. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

• Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year.
• You must determine the holding period to determine if the capital loss is short term (one year or less) or long term (more than one year).
• Report losses due to worthless securities on Schedule D of Form 1040 and fill out Part I or Part II of Form 8949. Losses (homes, stocks, other property)