Yes, the loss can be deducted. You would report the loss as worthless security and report it just as you would if you received a 1099-B. To do this here are some steps to enter stock losses due to bankruptcy of company
- With your return open, search for worthless stocks in the TurboTax search box.
- Click the Jump to worthless stocks link in the search results.
- Answer Yes to the question Did you sell any investments in 2020?
- Answer No to the 1099-B question.
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On the next screen, select the type of sale you had (stock, second home, collectible, land etc.) and click Continue.
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Continue following the onscreen instructions to enter the sale date of the disposition/bankruptcy/worthless stock, etc.
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Enter "0" for the sale price and "worthless" in the description.
How to Enter Worthless Stock
