Financial Planning for Generation X & Y Women
 
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Expert Q&A Archive

02/16/2010
Do I claim a loss on my tax return for selling stocks?
I have a question about stocks that I have held for some time that at this point have little or no value. While the company is still in existence, it does not make sense to pay a fee to sell these shares. But if I am going to claim the loss [on my tax return, I would have to do that, or would I?
Gary Silverman, CFP®:
expert info »
At the time the company becomes truly worthless, you can then claim the loss. However this is sometimes difficult to determine, and if the stock is selling for any value, it is obviously not worthless. So, yes, you'll need to sell off the stock. If the trading fee is more than the stock's worth, you can usually get the broker to waive any excess fees involved.
Gail Rosen, CPA:
expert info »
You cannot take a capital loss on stocks that have little or no value. They have to be actually worthless to take the loss.
Delores Lenzy - Jones, CPA, CIA:
expert info »
In order to claim the loss, you must sell the stock. Unfortunately, you generally need to pay a fee in order to transact the stock trade. It just depends on your tolerance for spending money in order to have a loss on your tax returns.
Rosemary Ervin, CPA:
expert info »
Unless the stock is worthless, you can only claim the loss when you dispose of the stock. If you do not sell it, in the year that it is listed as worthless, you claim the loss. To abandon a security, you must permanently surrender and relinquish all rights in the security and receive no consideration in exchange for it. If you do not claim the loss in the year it is considered worthless, you must go back to that year and amend your return to claim the loss. If the company is still in business, you will have to dispose of the security to take the loss.
Gail V. Marquet:
expert info »
To sell the stocks, you may be able to do it online thru e-trade or a similar source. To take the loss, you would have to sell the stock. If the company is still in existence, and you feel it likely to make a comeback in the long run, you may want to hold on to the stocks.

[Editor’s Note: See "IRS Reminds Taxpayers They Can Use Stock Losses to Reduce Taxes" on the IRS Web site at www.irs.gov/newsroom/article/0,,id=103509,00.html. It says, "A 'paper loss'—a drop in an investment's value below its purchase price—does not qualify for this deduction. The loss must be realized through the asset’s sale or exchange."]
Joan Koonce, Ph.D:
expert info »
You can only claim a loss on an investment if you sell the investment. Until you sell it, it is considered a paper loss.
 

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