You are entitled to claim a tax loss for stock that becomes worthless during 2019, but be aware that the IRS insists that it must be entirely worthless. The loss deduction isn’t available merely because the stock is no longer traded on a market and is practically worthless for all intents and purposes. If the IRS questions the loss, be prepared to establish that there’s no current liquidating value, as well as no potential value. The lack of a ready market or the decision of a company to file for bankruptcy doesn’t mean that stock is worthless.
Timing. Assuming that you’ve passed these hurdles, your next worry is timing. You can write off worthless stock only in the year it becomes worthless. A loss on worthless stock is always deemed to have been sustained on the last day of the calendar year (the date to use for its "sale"), regardless of when it became wholly worthless during the year.
What to do if you’re uncertain about the year of worthlessness. Nail down your deduction by claiming it for the first year in which you believe the stock becomes entirely worthless. If the IRS disallows the loss and contends that worthlessness didn’t actually occur until a later year, you still have time to claim the loss in that year. But if you hold off claiming the loss until a later year and the IRS says worthlessness occurred in an earlier year, it may be too late to file a refund claim.
The 2nd Circuit Court of Appeals in New York offered this advice: “The taxpayer is at times in a very difficult position in determining in what year to claim a loss. The only safe practice, we think, is to claim a loss for the earliest year when it may possibly be allowed and to review the claim in subsequent years if there is any reasonable chance of its being applicable for those years.”
so if you knew it was worthless in any year from 1992 through 2015 you can't claim the loss. The statute of limitations bars you from claiming it If you knew it went worthless in any year 2016 -2018 you can amend that year's return.
if you have a broker, they can help you determine if it is totally worthless or if it still has some worth, they may be willing to sell it. some professionals would take the position it's worthless if the proceeds would be less than or equal to the sales commission.
Report worthless securities on Form 8949, Part I or Part II, whichever applies. Indicate as a worthless security deduction by writing Worthless in the applicable column of Form 8949.
