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Capital Gains and Losses – Worthless Securities

When stocks, stock rights, or bonds (not held by a securities dealer) become completely worthless during the tax year, they are treated as if sold on the last day of that year. The resulting capital loss is short-term or long-term depending on the holding period. See IRS Publication 550 for details. In TaxAct, follow the steps below to enter a Form 1099-B that is for worthless securities.

Capital gain or loss on the sale or trade of investment property held one year or less (short-term) is reported in Part I of Schedule D (Form 1040) Capital Gains and Losses on Lines 1-3. A capital gain or loss on the sale or trade of investment property held more than one year (long-term) is reported in Part II of Schedule D on Lines 8-10. Based on your entries in the program, TaxAct will automatically transfer the information to the correct line.
 
Online 
Dashboard 
  1. From within your TaxAct return, click Income.
    • On smaller devices, click the menu at the top left corner of your screen, then make your selection.  
  2. Click the Investments & Savings drop-down.
  3. Click Add beside Stocks, Cryptocurrency & Other Investments.  
  4. Enter the form manually or search for a bank or financial provider.
  5. Enter or confirm the basic transaction details and click Continue.
  6. Under Additional details about this sale, select the radio button These were worthless securities.
  7. Click Continue.
Classic 
  1. From within your TaxAct return, click Federal. 
    • On smaller devices, click the menu at the top left corner of your screen, then make your selection.
  2. Click the Investment Income drop-down, and then click Gain or loss on the sale of investments and then Capital gain or loss (Form 1099-B). 
  3. Click Add Another sale.
  4. Enter the basic transaction details and click Continue.
  5. Under Additional details about this sale, select the radio button These were worthless securities.
  6. Click Continue.
Desktop 
  1. From within your TaxAct return, click Federal. 
  2. Click the Investment Income drop-down, and then click Gain or loss on the sale of investments and then Capital gain or loss (Form 1099-B). 
  3. Add a new Form 1099-B or click Review to update an existing form.
  4. Enter the basic transaction details and click Continue.
  5. Under Additional details about this sale, select the radio button These were worthless securities.
  6. Click Continue.