To claim a stock loss on your tax return, it's important to differentiate between what's worthless and what's nearly worthless. Photo: Shutterstock

How to Take a Stock Loss on Your Taxes

Feb 03, 2014

Q:I have 148 shares of Eastman Kodak stock, which is now worthless. How do I take the loss on my tax return? -- Peggy C., Whitestone, N.Y.

A: Because Kodak's old stock was canceled when the company emerged from bankruptcy last September, the process is simple.

On your 2013 tax return, just list the sell date as Dec. 31 and your proceeds as $0. Use this loss to reduce any capital gains you may have; if your losses exceed your gains, you can offset up to $3,000 in ordinary income per year.

In situations like this, it's important to differentiate between worthless and nearly worthless stock, says Greg Rosica, a tax partner at Ernst & Young. Kodak shares had little value once the company filed for bankruptcy in 2012, but you wouldn't have been able to claim a loss on that year's return unless you had actually sold the shares.

All products and services featured are based solely on editorial selection. MONEY may receive compensation for some links to products and services on this website.

Quotes delayed at least 15 minutes. Market data provided by Interactive Data. ETF and Mutual Fund data provided by Morningstar, Inc. Dow Jones Terms & Conditions: S&P Index data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Terms & Conditions. Powered and implemented by Interactive Data Managed Solutions