No, you can't deduct the full amount of your worthless stock. Net losses are deductible, but only up to a maximum of $3,000 ($1,500 if married filing separately).
- Any capital losses you couldn't deduct this year can be carried forward and deducted on future tax returns. This is called a capital loss carryover.
You can deduct worthless stock or a worthless investment only in the tax year it becomes completely worthless. This normally happens when the corporation files for bankruptcy, stops doing business, and has no assets.
- Enter a worthless investment with a sales price of zero and the word "worthless" in its description.
- Enter the correct cost or basis, date acquired, and December 31 as the date sold.
This is entered in the investment section of TurboTax. Capital gains, losses, and 1099-B forms are all entered in the same place:
- Open or continue your return in TurboTax
- Search for investment sales and then select the Jump to link in the search results
- Answer Yes to the question Did you have investment income in 2022?
- If you land on the Your investments and savings screen, select Add investments
- Follow the instructions and we'll calculate the gain or loss from the sale
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