Company stock value became zero after the company filed bankruptcy.
How to I report the loss of investment of a company that I had held shares more than 5 years and they became junk and declared bankruptcy. I believe it was bankrupt two years ago and I did not notify that in my return as loss. How do I go about it in my upcoming return for 2024?
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kvraj,
That is a great question!
You can take a capital loss on Schedule D in the year the security becomes worthless.
Thus, you should have claimed the loss the year the company declared bankruptcy and the shares became worthless.
If you did not claim that loss in the year they became worthless, I recommend that you amend that return to claim the loss.
Depending on the amount of the loss, the loss may result in a capital loss carryover to be carried to future years. Thus, you may need to amend more than just a single return to continue to claim the loss carryover and the loss may be carried forward to 2024.
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Thank you for joining our community, Kvraj.
You can treat this event as a stock sale. Your sales proceeds would be $0 and you would report the cost basis as well. FreeTaxUSA will calculate the loss based on the cost basis amount. Regarding the capital losses, you are able to deduct up to $3,000 per year on your tax return. The remaining loss amount is carried forward until used up (3k per year) or combined with capital gain income.
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Thanks for your detailed answers. Much appreciated!
