You have to realize the loss. That means you have some final determination that it is worthless. Maybe the company buys it back for 1 cent. Or, the company declares bankruptcy and, per the terms of the bankruptcy, the bondholders are paid zero. However, until there is some kind of final determination, you can't take a loss. For example, if the company restructures its debt and pays the bondholders 20 cents on the dollar, then you have realized an 80 cent loss, and you would report the loss by reporting the sale of the bond for less than you paid for it, as of the date you were paid. As long as the there is a possibility of being paid something, the loss can't be taken.
