I have had some stock in a company for a number of years that pretty much went bankrupt, so I will have a loss when it is sold (around $500). I have decided that I definitely want to sell the stock, but for tax purposes, should I sell this stock on a year that I have some gains registered to take advantage of the small tax benefit? Is this correct, or is there anything else I should know?


I found the answer I was looking for. Even though I don't have any capital gains to offset, I can deduct up to $3,000 of that loss against other kinds of income, including salary.

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    And if your capital losses exceed your gains plus 3000, you can carry it forward on your federal return (and some states) to the future indefinitely. This year I just fully consumed a carryover loss I started in the Bush administration. – user662852 Jul 12 '16 at 22:39

If you have someplace to put the money which you think will yield significantly better returns, by all means sell and buy that.

On the other hand, if you think this stock is likely to recover its value, you might want to hold it, or even buy more as a "contrarian" investment. Buy low, sell high, as much as possible. And diversify.

You need to make a judgement call about the odds. We can point out the implications, but in the end whether to sell, buy, hold or hedge is your decision.

(This also suggests you need to sit down and draw up a strategy. Agonizing over every decision is not productive. If you have a plan, you make this sort of decision before you ever put money into the stock in the first place.)

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    The company is bankrupt. He can take the loss, but won't have any money to buy something else. – JTP - Apologise to Monica Jul 12 '16 at 19:15
  • I have since swapped to mostly index funds so this lone stock is "leftover" from earlier years of dabbling in individual stocks. The value of the stock is near zero and I don't plan in it recovering, so the question was mainly about any tax advantages I could get. – yellavon Jul 12 '16 at 19:16
  • Sorry, missed the bankruptcy. In that case, will anyone buy the stock at all? – keshlam Jul 12 '16 at 19:18
  • Yes, it is still trading, albeit for pennies. – yellavon Jul 12 '16 at 19:20
  • In that case, were back to whether you think it will be worth more pennies later or if you'd rather get that tiny amount of money back now. – keshlam Jul 12 '16 at 19:22

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