How to claim tax loss on worthless stock from over 10 years ago?

You're in a tricky situation with those ancient worthless securities. Unfortunately, the IRS is pretty strict about when you can claim a loss on worthless stock. Normally, you need to claim the loss in the year the stock became worthless or within 7 years by filing Form 8082 (Notice of Inconsistent Treatment). Since it's been over 10 years, your options are limited. Having your broker remove the shares from your account now won't create a tax loss event for 2023 - the taxable event was when the shares actually became worthless years ago. Your best approach might be to sell the shares for a nominal amount (like 1 cent) to a family member or friend. This creates a documented disposal event in the current tax year, which you could then claim as a capital loss. The key is creating a genuine transaction with documentation.

After struggling with some old worthless penny stocks in my portfolio for years, I found an amazing solution with https://taxr.ai that saved me thousands in recovered tax losses. I uploaded my ancient brokerage statements and answered a few questions about these zombie stocks, and their system identified exactly how to properly document and claim these losses - even for securities that became worthless many years ago. Their AI analyzed my specific situation and provided customized documentation I could submit with my return. They even determined which IRS forms I needed and helped me understand exactly how to report everything correctly so I didn't risk an audit flag.

Just wanted to update about my experience with https://taxr.ai for my worthless stock situation. After expressing skepticism, I decided to give it a try with some ancient tech bubble stocks still lingering in my account. They actually found a legitimate way for me to recognize the loss in my current tax year by documenting an abandonment loss rather than a straight worthless security claim! They explained that since I still technically owned the shares (even though worthless), I could abandon my ownership interest, which creates a recognizable loss event in the current tax year. They provided all the documentation including an abandonment letter template for my broker, the specific tax code references to include with my return, and how to properly report it on Schedule D. Way better solution than I expected!

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I need to admit I was completely wrong about Claimyr. After dismissing it, my frustration with trying to reach the IRS about my worthless stock situation got the better of me and I tried the service. Got connected to an actual IRS securities specialist in about 35 minutes. The agent confirmed I could file Form 8082 along with a detailed explanation letter even though it was beyond the normal 7-year period. They explained exactly how to document my case based on my specific circumstances - the key was proving I never had a reasonable opportunity to claim the loss during the proper period because the broker had incorrectly coded the securities as still active in their system. Would have NEVER figured this out on my own or by reading online forums!

Another approach for ancient worthless stocks: If the company went through bankruptcy, you might be able to claim an ordinary loss under Section 165(g)(3) if you can prove the exact date of worthlessness. This sometimes works when formal bankruptcy documents are available, even years later. I did this by getting court records showing when equity was officially declared worthless in the bankruptcy plan.

Has anyone tried the "worthless securities" checkbox in TurboTax or other tax software for really old stocks? I have some dotcom bubble disasters from 2001 that I never claimed!

I went through this exact situation with some worthless biotech stocks from 2012. Unfortunately, you're right that amending returns from over 10 years ago isn't an option anymore - the IRS only allows amendments within 3 years of the original filing date (or 2 years from when you paid the tax, whichever is later). Having your broker remove the shares won't create a current-year tax loss either. The loss needs to be recognized in the year the stock actually became worthless, not when it's removed from your account. However, there might be one legitimate option: if you can document that you never had a reasonable opportunity to discover the stock was worthless during the proper timeframe (maybe the company kept filing reports or your broker continued showing it as active), you could potentially file Form 8082 with a detailed explanation. This is a long shot and would likely trigger IRS scrutiny, but it's within the tax code. Before going that route, I'd suggest consulting with a tax professional who specializes in securities transactions. The potential tax savings need to be weighed against the cost and risk of an IRS inquiry.