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On February, 3 2000 I purchased shares in iVoice.com (IVOC). These shares sat in a "hobby" account which I rarely looked at until recently.

I'm looking for guidance on how best to deal with the worthless positions cluttering my account after an interesting sequence of transactions by iVoice.

2005/08/15 IVOC spins off three new companies leaving me with holdings in four stocks
           DPFD - Deep Field Technology
           IVOT - iVoice Tech
           SSWC - Speechswitch Inc
           IVOC - iVoice Inc
2006/04/28 IVOC does a 1 for 200 reverse split and converts into a new stock 
           IVOI - iVoice Inc NEW
2007/11/21 IVOI spins off a new company  
           TPHM - Thomas Pharmaceuticals
2009/12/31 iVoice Tech renames to B Green Innovations Inc
           BGNN - B Green Innovations Inc
2011/03/02 Speechswitch Inc renames to Kenergy Scientific Inc
           KNSC - Kenergy Scientific Inc
2013/09/13 SEC revokes registrations of iVoice Inc NEW
2014/09/26 B Green Innovations does a 1 for 10,000 Reverse Split

So 14 years later I'm left with positions in the following entities:

  • BGNN
  • DPFD
  • KNSC
  • TPHM
  • iVoice Inc NEW (Completely illiquid as it has been revoked by the SEC)

BGNN is trading at 0.09 but the others are 0.0001. I'm half wanting to sell them just to clean up the clutter in my monthly statement. But I'm half tempted to hold on just to see what other crazy things happen with these companies or maybe this is common for penny stocks.

If I wanted to claim my loss do I have to sell all the positions and just treat iVoice Inc NEW as dead or is there something special you need to do to show you couldn't sell it?

  • I'm assuming you're in the US? – littleadv Dec 20 '14 at 7:04
  • I am a US citizen living abroad so I'll still file US taxes. – cclark Dec 20 '14 at 7:07
  • Is it a US broker? – littleadv Dec 20 '14 at 7:07
  • Yes it is held at Schwab. – cclark Dec 20 '14 at 7:56
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Generally, to be able to write off worthless securities, you need to show that they're indeed worthless. It's not necessarily easy, as you need to prove that there's no way they will regain any value in the future.

What is usually done, instead, is very simple: you sell them. Many brokers are aware of this problem and will assist by buying these securities from you at a nominal price (E*Trade, for example, for $0.01, ScotTrade for $0.00), and providing a proper trade confirmation. This is a bona fide sale, so if the stock does regain value - it will be a profit for the broker. In this case - you just report it as a sale at loss.

Check with your broker if they support such a solution.

  • I contacted Schwab and this is what they call a "courtesy sell". The commissions will never exceed the proceeds and if they are unable to sell it on the open market they purchase it from you as stated. They also are able to deal with stock that which had the registration revoked by the SEC and classified it as "Reorganized Issue". – cclark Jan 2 '15 at 7:23

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