Worthless Stock?
Dolores Kong

If securities that you owned became totally
worthless in 2002, you can claim the total loss on
Schedule D when you do your federal taxes this
season. The company that you invested in must have
gone bankrupt or otherwise out of business last
year, for you to claim the total loss. Write
"Worthless" in columns (c) and (d) of Schedule D,
and put in parentheses the amount of your total loss
in column (f). If you sold stock last year in a
company that merely filed for bankruptcy protection,
and got pennies on the dollar, that's not considered
a worthless security in the IRS' eyes. But you can
write off as a loss the difference between what you
paid for the stock and transaction costs, and what
you got from the sale. For more details, see IRS
Publication 550, "Investment Income and Expenses
(Including Capital Gains and Losses)."