If the stock is worthless, you should be able to report your complete investment in the stock even if it was purchased in several lots. Make sure that the correct long-term or short-term basis is used.
Stocks, stock rights, and bonds (other than those held for sale by a securities dealer) that became completely worthless during the tax year are treated as though they were sold on the last day of the tax year.
A stock may become worthless when the corporation files for bankruptcy, stops doing business, and has no assets. Financial difficulties will not make a company's stock worthless unless there's no hope that the company will survive. Worthless stock includes abandoned stock, permanently surrendered for no consideration.
Stocks that become wholly worthless during the tax year are treated as though they were sold on the last day of the year.
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.
See IRS Publication 550 Investment Income and Expenses, page 54.
Follow these steps to report the entry into TurboTax Online.
- Down the left side of the screen, click on Tax Home.
- Click on the down arrow to the right of Review.
- Click on the blue band labeled Review.
- Down the left side of the screen, click Federal.
- Down the left side of the screen, click Wages & Income.
- Click the down arrow to the right of Investments and Savings.
- Click to the right of Stocks, Cryptocurrency, Mutual Funds, Bonds, Other (1099-B).
- Click Add investments.
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