How do I enter long term worthless stock losses without a 1099-B?

[HelenC12]

You can deduct worthless stock 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. Financial difficulties won't make a company's stock worthless unless there is no hope that the company will pull through.

Enter a worthless stock like any stock sale but 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.

To enter worthless stock as investment sales:

1. Open (continue) your return in TurboTax.
2. In the search box, search for investment sales then click the "Jump to" link in the search results.
3. Answer Yes to the question Did you sell any investments?
   • If you land on the Here's the investment sales we have so far screen, click Add More Sales.
4. Answer No to the 1099-B question.
5. On the next screen, select the type of sale you had (stock, second home, collectible, land etc.) and click Continue.
6. Continue following the onscreen instructions to enter the sale.

Related Information:

• Where do I enter a 1099-B?
• Do I have to report personal items that I sold?

[Airplaneandcars]

This was helpful, however TurboTax still wants an image or a paper copy of the 1099-B form after the loss is submitted in this section. Speaking with my Brokerage they clarified that only a sale of stock would have triggered them to submit a 1099-B. If the stock went bankrupt and is no longer publicly traded, they will not send you a 1099-B. They indicated the best way to document the loss is to use the quarterly statements. Will TurboTax still want me to track down a non-existent 1099-B? Or can I submit as is with no form?

[Airplaneandcars]

Should have mentioned, these are the options. Which one should I pick? I don't have a 1099-B at all!

You'll need to mail a paper copy to the IRS if you don't upload it.

If you plan on uploading your 1099-B later, come back and edit this sale whenever you're ready.

-I'm going to mail a paper copy of my 1099-B to the IRS

-I'm planning to upload a PDF copy of my 1099-B later

[DavidS127]

The instructions provided earlier by HelenC12 should work for you if you are using the Download/CD version of TurboTax. 

In TurboTax Online, you don't get a "Did you get a 1099-B" question.  Instead, when you get to the "Let's import your tax info" screen you should choose I’ll type it in myself in the bottom right.  On the next screen, for the Broker name, type in something descriptive, like “Options” in the box, and leave the account number blank.  Continue on, and you'll get to the screen where you can choose to "Enter sales one by one".  You'll eventually get to the screen where you can enter the sale for which using the choice "....did not receive 1099-B form".

Either way, you do not need to attach a 1099-B when you didn't receive one.

[JimDenver1]

I have American Depositary Receipts (ADRs) for the underlying Russian stocks. These ADRs are not trading in US for a year while the underlying stock trades in Russia ok. US financial institutions (Citi, BONY, etc) that sponsored there ADRs exited depositary agreements in mid ' 22 and, effectively, abandoned underlying securities. Thus, there is no link between these phantom ADRs and underlying Russian shares. Can I consider these ADRs worthless for tax purposes and write them off  for '22? Brokerage statement shows some of them with N/A in the value column.

[ee-ea]

Can I consider these ADRs worthless for tax purposes and write them off  for '22? 

Yes, you can not get any mnoey for the ADRs.

How to take the loss info is in the other posts in this thread.

[KkeeNJ]

I'm wondering this as well. My 1099 statement does not include anything indicating they're worthless, but I believe they should be treated as such.

[GeorgeM777]

Whether your securities are worthless is a question of fact.  The burden is on the taxpayer to prove the securities are worthless.  If possible, you might consider selling the securities for whatever price you can get because once sold, then you have a more definitive way of proving a capital loss.  However, if you feel you can prove the securities are worthless, here is an FAQ from the IRS on this issue.

Question

I own stock that became worthless last year. Is this a bad debt? How do I report my loss?

Answer

If you own securities, including stocks, and they become totally worthless, you have a capital loss but not a deduction for bad debt. Worthless securities also include securities that you abandon. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it.

• Treat worthless securities as though they were capital assets sold or exchanged on the last day of the tax year.
• You must determine the holding period to determine if the capital loss is short term (one year or less) or long term (more than one year).
• Report worthless securities on Part I or Part II of Form 8949, and use appropriate code for worthless security deduction in the applicable column of Form 8949.

IRS and a Worthless Security

@KkeeNJ

[KkeeNJ]

Thank you. I'm reporting them as short term, 1099 not received and checking the worthless security box. It's not possible to sell the stocks because sanctions make that illegal. In the meantime, Russia has banned the ADRs, so there is no Russian stock tied to these ADRs. The loss must be claimed in the year they became worthless, which would be this year. It would be nice if the IRS issued formal guidance on this because I'm sure there are others in the same situation.

[Vanessa A]

Yes, if it is illegal to sell the stock you own, they would meet the criteria for worthless securities.  And yes, you are correct.  You would need to claim them in the year they became worthless, so if the sanctions were placed in 2022, you would write them off on the return you are currently filing.  So the steps you have listed are the correct path to follow to handle your ADR's. 

[Brian P2]

1. Can I consider united cannabis corp (CNABQ) worthless?
   I saw this from the SEC https://www.sec.gov/litigation/opinions/2022/34-94115.pdf
2. i tried called the company and it doesn’t seem like the phone number exists.
3. on the Colorado secretary of state site it says the status is Delinquent.. 
4. when googling the business it says permanently closed.

when I spoke with Fidelity investments(my broker), they told me it’s not worthless.

if anyone can provide guidance that would be greatly appreciated.

[DianeW777]

Perhaps.  The link you provide declares the Security and Exchange Commission (SEC) is in pursuit against UNITED CANNABIS CORPORATION (CNABQ) for violations and lack of submitting the requested filings. Unfortunately it does not say they are out of business as of yet. And Fidelity agrees the stock is not yet worthless.

On the other hand you find evidence the business is permanently closed.  The following will provide guidance and then you can decide if you feel your proof is evidence enough to file the loss this year or if you want to wait until 2023.

You can report it in the year they are deemed to be completely worthless. This usually happens when a company stops doing business or files bankruptcy.  You should be prepared with your proof and retain it in your tax file.

The sales price would be zero and the cost basis would be what you actually paid for the stock and December 31st as the date of sale

 To enter worthless stock as investment sales: (You should use the description as 'Worthless'.)

1. Open (continue) your return in TurboTax.
2. In the search box, search for investment sales then click the "Jump to" link in the search results.
3. Answer Yes to the question Did you sell any investments?
   • If you land on the Here's the investment sales we have so far screen, click Add More Sales.
4. Answer No to the 1099-B question.
5. On the next screen, select the type of sale you had (stock, second home, collectible, land etc.) and click Continue.
6. Continue following the onscreen instructions to enter the sale. 

Helpful Information:

• How do I deduct worthless stock?
• IRS FAQ -Worthless Security

@Brian P2 

[Brian P2]

It’s seems very tricky… how do I know which year it became worthless and how do I prove it?

[GeorgeM777]

Agreed, it can be difficult to know with sufficient certainty that a security is worthless.  As mentioned by @DianeW777, when a business closes or files for bankruptcy, would be useful facts in support of a claim that a security is worthless.  In addition, if a security is delisted, that would also tend to support a claim that a security is worthless because it no longer has a public market.   The SEC's order revoking the registration of all classes of stock in the company does help your tax situation, but at this time, we don't know what actions the company intends to take regarding their stock.  

The fact that your firm, Fidelity, has told you the security is not worthless does not help your tax situation.  You might consider asking them to list, for sale, the security in question to see if there are any bidders that are willing to purchase the security from you.  If you can close the transaction, even for a few cents, at least you will have a realized loss and can enter same on your tax return and also avoid the whole issue regarding whether your security qualifies as a worthless security.  

Whatever evidence your broker can provide to you with regard to the steps they took to sell the security in question, and their inability to do so, might help your tax situation.   However, even if they cannot sell it now, does not mean that at some time in the future, their may be a market for your security.   

Given all these factors, you might consider discussing the matter with a personal tax advisor. 

@Brian P2