Worthless Stock
March 27th, 2006 by jhampton
How long should you hang on to worthless stock? If you haven’t placed stop orders then YOU will have to decide how you want to handle a losing stock.
Possibly you can consider your loss a tax loss as well. Just make sure do it correctly. The IRS has some lengthy regulations on this topic:
(1) Get the actual stock certificates from your broker.
(2) Formally sell the shares to the purchaser, with a check for payment and a bill of sale.
(3) Sign over the stock certificate on its back to the purchaser. Have the signatures verified by your banker and/or a local stockbroker.
(4) Send the certificate to the stock transfer agent. Explain that the shares have been sold, and ask her to cancel the old shares and issue a new certificate to the new owner.
Some brokerages will buy all your shares for a penny. They do it to help out their customers and because over time, some shares may actually end up worth more than the penny paid for them. For tax info and tips, visit www.irs.gov and www.fool.com/taxes.
Posted on Monday, March 27th, 2006 at 8:13 pm In Stock Market Investing