I sold a Penny stock that is non marketable to Td Ameritrade for zero dollars. I bought this for 29k seven years ago. Will I be able to claim 29k for capital loss?

[silly41]

I bought a penny stock (over 2 million shares) for 29k 7 years ago.  I sold it to Td Ameritrade for zero dollars.  On my trade confirmation it states:

Sold 2000000 SPGNQ at 0.      Amount. 0.01  Net Cash Balance  .01

Will I be able to claim capital loss of 29k?

[TomYoung · Accepted solution]

Yes.  You have a 2017 realized loss of $29K.

You are supposed to report the loss on a security in the year it becomes totally worthless but as long as it's trading anywhere for any amount it's not "worthless" in the eyes of the IRS.  So if this stock actually became worthless under the IRS's strict definition in some previous year the you really should amend that year's income tax return. 

Tom Young

[silly41]

thank you.  As TdAmeritrade bought the shares of SPNGQ for zero dollars, would this be considered worthless or not worthless in the eyes of the IRS?  I was not able to sell any shares in the last 5 years as there were no buyers and I could not sell it till this year to the broker (Tdameritrade)

[TomYoung]

Oh, it's certainly worthless.  And as a practical matter I'd expect the 1099-B reporting the sale would be exactly what the IRS relies upon.

[fanfare]

in prior years TurboTax would not even let you enter "Worthless" as the proceeds, so you had to enter zero
and put  "(worthless)" in the description. It probably still works this way.

[igor555]

so if it became worthless 3 years ago do i need to restate my taxes for last 2 years?

[TomYoung]

If the stock literally became worthless 3 years ago then you should amend that year's income tax return.  You can see the IRS's logic here.  Your income tax return is supposed to reflect your net income FOR THAT YEAR.  Delaying the recognition until some year when you "can use it", (i.e., the year you have a big capital gain), is tantamount to income manipulation.

[macuser_22]

And any loss that does not offset gains in the tax year that the loss occurred can offset up to $3,000 of ordinary income with the remaining loss carrying over to the next tax year.   No tax year can be skipped or the carry over will be forfeited.

[igor555]

ok thanks so i need to amend last 3 reports

[fanfare]

you have a 1099B with  date of sale , so report the loss in 2017.