What are the rules for buying nearly worthless stock from customers?
Many brokers have special rules for buying nearly worthless stock from customers. E-Trade, for example, charges a $5 commission to buy shares in a worthless-securities liquidation, which provides you with a trade confirmation for your tax records. Charles Schwab offers a courtesy sale for people who can't sell their shares.
Are stock brokers worth their commissions?
Historically, stockbrokers charged fairly hefty commissions on stock trades, which meant that buying and selling small amounts of stock often wasn't worth it because the commissions would swallow a large part of your proceeds.
What to do with worthless stock that has lost all its value?
Here’s how to sell your worthless shares of stock that have lost all of their value. If you hold shares that have become worthless, maybe because the company has ceased operations, you are probably interested in deducting the full cost basis of that position when you do your taxes.
How do you write off worthless stock on taxes?
When you do your taxes, you would write “12/31” as the date of sale and “worthless” (or 0) as the sales price. For example, if the company has delisted the shares or closed down completely, a letter from your broker or even a letter from the company might be sufficient to establish the year in which the shares became worthless.
Can you write off a loss if a company goes out of business?
You generally need to sell shares to be able to write off the loss. But if the company goes completely out of business and there isn't anything left for share holders, then you can deduct the loss as a worth less security without selling it .
Can a broker write off a loss?
In that case, your broker may help take the shares off your hands so you can write off the loss. Many brokers have special rules for buying nearly worthless stock from customers. E-Trade, for example, charges ...
What to do if you can't sell worthless stock?
If for whatever reason you cannot sell the worthless shares, then you will need to obtain documentation that will convince the IRS that the stock really, truly had no value at some point in time, and close the position at that same time. This will relieve you of the burden of selling the shares. It’s very important that you can demonstrate ...
Why did Columbia Gas file for bankruptcy?
More recently, about 1991 Columbia Gas of Ohio filed for bankruptcy to get out of some unfortunate long-term contracts they had written for natural gas purchases. Their stock continued to trade, generally in the $30 range, until they finally emerged with a favorable court ruling. Article Credits:
Is a bankrupt company worthless?
Don’t confuse a bankrupt company with a completely defunct company. Many companies continue operating while in bankruptcy proceedings, and their stock continues to trade. So the stock by definition is not worthless. In the newspaper listings, the prefix ‘vj’ is often used to indicate such companies.
What is a full service brokerage?
Full-service brokerage firms have stockbrokers who will help you place your trades and provide investment advice. Alternatively, you can place your money in a professionally managed account that will invest your money for you. Full-service firms charge higher commissions to offset their higher service costs. Step 2.
Can discount firms help you trade?
Discount firms have stock brokers on staff, but they can only help you place a trade. They will not give you investing or trading advice. Decide which type of brokerage firms fit your trading needs. Go to each firm’s website and find the commission schedule.
Can you buy exchange traded funds?
You can purchase exchange-traded funds, which are investment funds that are bought and sold similar to stock. Many of them invest in the stocks in particular stock indexes, such as the S&P 500 or the NASDAQ, meaning they can be cheaper and give even better returns than traditional mutual funds, where stocks are picked by highly paid experts. ...
Do stock brokerage firms charge the same commission?
Stock brokerage firms typically charge the same commission regardless of how many shares of a stock you buy or sell in one transaction. That means for smaller transactions, those fees represent a higher percentage of what you're paying for the stock itself.