Worthless Securities

DEFINITION of 'Worthless Securities'

Securities that have a market value of zero. Worthless securities can include stocks or bonds that are either publicly traded or privately held. These securities result in a capital loss for the owner and can be claimed as such when filing taxes.

BREAKING DOWN 'Worthless Securities'

The problem with declaring worthless securities as a loss for tax purposes is that you must sell securities before making this claim. Unfortunately, worthless securities are unsellable. Another difficulty comes from investors who own securities that they are not sure are totally worthless in a given year. If they go ahead and declare them as such and then they are deemed to have value the next year, taxpayers can file an amended return for the previous year and redeclare the loss the following year.

RELATED TERMS
  1. Bag Holder

    An informal investment term used to describe an investor who ...
  2. Security

    A financial instrument that represents an ownership position ...
  3. Investment Securities

    Securities that are purchased in order to be held for investment. ...
  4. Short-Term Gain

    A capital gain realized by the sale or exchange of a capital ...
  5. IRS Publication 17

    A document published by the Internal Revenue Service that outlines ...
  6. Falling Knife

    A slang phrase for a security or industry in which the current ...
Related Articles
  1. Financial Advisor

    Using Tax-Loss Harvesting to Keep Your Gains

    Harvesting tax losses is a key skill that investors can use to keep more of their money in their pockets the next time they file taxes.
  2. Investing

    Beware Of This Common Income Trading Fallacy

    You would be shocked to know how many accepted "facts" in the financial world are simply not true. For example, you may have been told that asset allocation -- the amount of your portfolio you ...
  3. Markets

    How I Generated A 17.1% Yield... In Just 37 Days

    The week after options expire is one of my favorite times of each month. That's because, as usual, it means it's time for readers of my premium advisory, Income Trader, and I to review ...
  4. Markets

    What are Government Securities?

    Government securities are debt instruments that governments issue to raise capital.
  5. Investing

    What's the Primary Market?

    The primary markets are where investors can get first crack at a new security issuance.
  6. Retirement

    Top Tax Tips For Retirees

    Filing your taxes during retirement can be just as time consuming as when you were employed. We have some tips to help you out.
  7. Retirement

    5 Tricks For Stretching Your Social Security Benefits

    Here are five clever tips for stretching your Social Security dollar as far as possible.
  8. Trading

    Explaining Options Contracts

    Options contracts grant the owner the right to buy or sell shares of a security in the future at a given price.
  9. Retirement

    How Social Security Works for the Self-Employed

    As both employee and employer, you have to pay more in Social Security, but there are deductions that can help lighten the tax burden.
  10. Personal Finance

    7 Year-End Tax Planning Strategies

    Do you have a capital loss that could be booked and used to offset future tax liabilities? If so, it may be time to sell.
RELATED FAQS
  1. Can I swap bankrupt stocks to another company?

    I have over 500,000 stocks in NSMG and I think they went bankrupt. I have been holding on to them for years because I don't ... Read Answer >>
  2. Does every average person have to pay social security tax and file taxes?

    I know someone who is in their seventies and has not paid social security tax or filed taxes since they retired. They have ... Read Answer >>
  3. What are the characteristics of a marketable security?

    Find out what it takes for a financial asset to be considered a marketable security, including its liquidity, intent of use ... Read Answer >>
  4. Does working capital include marketable securities?

    Learn how marketable securities such as Treasury bills (T-bills) and commercial papers are part of current assets and the ... Read Answer >>
  5. Do traders, market makers, specialists or others ever deliberately drive a stock's ...

    Many individual investors have had the experience of closing their position in a stock only to see the price rebound moments ... Read Answer >>
  6. How do I evaluate a debt security?

    Look at a brief overview of the important factors to consider before purchasing a debt security, such as a corporate or government ... Read Answer >>
Hot Definitions
  1. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  2. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
  3. Underweight

    1. A situation where a portfolio does not hold a sufficient amount of a particular security when compared to the security's ...
  4. Russell 3000 Index

    A market capitalization weighted equity index maintained by the Russell Investment Group that seeks to be a benchmark of ...
  5. Enterprise Value (EV)

    A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is ...
  6. Security

    A financial instrument that represents an ownership position in a publicly-traded corporation (stock), a creditor relationship ...
Trading Center