Worthless stock does not have any value in the stock market, which can happen to any stockholder at one time or another. It is important to know if you are holding onto worthless stock so that you can deduct the value from your taxes. A company's stock becomes worthless when it has its assets liquidated or it closes down completely. If the stock simply reduces in monetary value dramatically, it is not considered worthless. This includes some companies that have declared bankruptcy, as their stock may still be viable.
Look for Form 1099-DIV to be mailed to you at the end of the year by the company. Companies send out these forms once they have liquidated their assets, which means that the stocks are worthless.
Contact the company to get proof that the stock is worthless if it did not liquidate its assets. A letter from the company saying that it has shut down will provide proof that you need to deduct money from your taxes.
Ask your stockbroker for information on whether the stock has been proven worthless, if you have been trading with a stockbroker. He can provide a letter saying that the company has closed its doors, which is proof to deduct money from your taxes for the worthless stock.
Hire a company that specializes in investigating stocks and securities to find out if your stocks have market value. These companies will charge you for the investigation, but provide an easy way to find proof that the stocks are worthless. These companies include Stock Research Services and Stock Search International.
Keep your certificates from worthless stocks, as they might have value for collectors in the future.
