How to deduct BBBY stock losses after bankruptcy made my shares worthless?
I invested in BBBY back in July 2022 and watched my investment basically evaporate during their bankruptcy process. I put in around $2,700 and literally got back $19 in October 2023 after everything was said and done. The problem is I never technically sold the stock - it just became worthless during the bankruptcy. So I'm not getting any 1099 form to document this loss. How do I claim these losses on my taxes without having a 1099? Can I still deduct them somehow? I've got records of my purchase in my brokerage account but nothing official showing they became worthless. I'm doing my own taxes since I don't have complicated finances or make enough to justify paying someone. Any advice would be super appreciated!
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Mikayla Davison
You can absolutely claim a loss on worthless securities! This falls under the "worthless securities" provision in the tax code. You'll need to treat the shares as if you sold them for $0 on the last day of the tax year in which they became worthless. For your BBBY stock, you'll report this on Schedule D and Form 8949 of your tax return. Since you didn't receive a 1099, you'll need to check Box C on Form 8949 (for transactions without being reported on a Form 1099-B). List the details of your BBBY shares, including your cost basis (what you paid - the $2,700), the date acquired (July 2022), date sold (12/31/2023 - the last day of the year they became worthless), and sales proceeds (the $19 you received). The IRS will consider this a capital loss, which you can use to offset capital gains. If your losses exceed your gains, you can deduct up to $3,000 against ordinary income, and carry forward any remaining losses to future years.
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Adrian Connor
•Do you need any specific documentation to prove the stock became worthless? Like something official from the bankruptcy court or the company? I'm in a similar situation with a different stock.
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Mikayla Davison
•Yes, it's wise to keep documentation supporting your claim. Your brokerage statements showing the purchase and the final value after bankruptcy would be helpful. News articles about the bankruptcy and any notifications from your broker about the shares becoming worthless are also good to keep. If you received that $19 payment during liquidation, save that documentation as well. It's technically considered proceeds from the worthless security, which means your loss would be your original investment minus that $19.
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Aisha Jackson
I had a similar issue with a different stock last year and found taxr.ai super helpful with this exact situation. Their system analyzed my brokerage statements and helped me properly document the worthless security loss on my tax forms. They have specialists who understand these niche tax situations that most basic tax software doesn't cover well. Just upload your statements to https://taxr.ai and they walk you through how to report everything correctly. Saved me hours of research and gave me peace of mind that I was claiming the loss correctly.
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Ryder Everingham
•Does it work with all brokerage accounts? I use a smaller platform and sometimes tax software doesn't recognize their formats.
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Lilly Curtis
•I'm curious how much it costs? Their website doesn't make it obvious and I'm trying to avoid spending money when I've already lost on these investments.
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Aisha Jackson
•It works with all the major brokerages and most smaller platforms too. They have document recognition technology that can extract the relevant info even from unusual formats, which was helpful for me since my brokerage statements aren't the clearest. The cost depends on your specific situation, but I found it reasonable considering the time it saved me and the confidence it gave me that I was claiming my losses correctly. They offer different service levels depending on what you need. For me, the peace of mind was worth it since I was worried about messing up the reporting on my worthless stock.
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Lilly Curtis
Just wanted to follow up - I decided to try taxr.ai after asking about it here. Seriously impressed with how easy they made this! I uploaded my BBBY purchase statements and the final bankruptcy notification from my broker, and they guided me through exactly how to report it on Form 8949. They even explained the tax court precedents that allow for worthless security deductions so I'd feel confident if I ever got questioned. Definitely worth it for the peace of mind alone.
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Leo Simmons
If you're having trouble getting through to the IRS for clarification on claiming worthless stocks (which happened to me), I'd recommend using Claimyr. I was on hold for HOURS trying to get someone at the IRS to confirm the proper way to document this on my return. Found https://claimyr.com and they got me connected to an actual IRS agent in about 20 minutes. You can see how it works in this demo: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree for you and call when an agent is available. The IRS agent was able to confirm exactly how to report my worthless stocks without a 1099.
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Lindsey Fry
•Wait, how exactly does this work? They somehow get you through the IRS phone queue faster? I've literally spent entire afternoons on hold.
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Saleem Vaziri
•This sounds like BS honestly. The IRS phone system is the same for everyone. How could they possibly get you through faster unless they have some inside connection? Seems sketchy.
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Leo Simmons
•It's actually pretty straightforward - they use technology to keep dialing and navigating the phone tree for you. When they finally get a human on the line, they call you to connect. So instead of you waiting on hold for hours, their system does the waiting. No, they don't have any special "inside connection" - they're just using automated technology to handle the wait time instead of you having to do it yourself. I was skeptical too, but after spending 2+ hours on hold myself with no success, I figured it was worth a try. Got connected to an actual IRS agent who answered my specific questions about reporting worthless securities.
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Saleem Vaziri
I'm eating crow here. After my skeptical comment, I decided to try Claimyr since I needed help with my BBBY losses too. Not only did it work, but I got through to an IRS rep in about 25 minutes after spending TWO DAYS trying on my own. The agent confirmed I should report it as a capital loss on Form 8949 with the date of worthlessness (Dec 31, 2023) as the sell date, and my original basis minus the small liquidation payment as the loss amount. Sometimes being proven wrong is actually helpful!
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Kayla Morgan
Just an FYI - you don't technically have to use the last day of the tax year as the date of worthlessness. You should use the actual date when the shares officially became worthless, which for BBBY would have been when the bankruptcy court approved the liquidation plan and confirmed shareholders would receive minimal or no recovery. That should be documented in bankruptcy court filings.
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Max Reyes
•Thanks for this clarification. Do you know where I can find the exact date for BBBY? My broker just sent a general notification about the bankruptcy but didn't specify an exact "worthless" date.
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Kayla Morgan
•The most accurate date would be when the bankruptcy court approved BBBY's liquidation plan, which I believe was in September 2023. However, the IRS often accepts the last day of the tax year (December 31, 2023) as a default date for worthless securities if the exact date isn't clear. You could check PACER (the court records system) for the exact date of the bankruptcy order, but honestly, using December 31 is commonly accepted and less likely to raise questions. Just be consistent and make sure you're claiming it in the correct tax year when the shares actually became worthless.
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James Maki
Anybody else notice that TurboTax handles this really poorly? I tried to enter my worthless stocks last year and it kept wanting a 1099-B. Had to manually override it.
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Jasmine Hancock
•Try FreeTaxUSA instead. It has a specific section for worthless securities that doesn't require a 1099. It's also way cheaper than TurboTax and handles these investment scenarios much better.
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Raul Neal
I went through something similar with another bankrupt stock last year. One thing that helped me was creating a simple spreadsheet documenting everything - purchase date, amount invested, bankruptcy filing date, final liquidation date, and any final payments received. This made it much easier when filling out Form 8949. Also, don't forget that if your capital losses exceed $3,000 for the year, you can carry forward the remaining losses to future tax years. With a $2,681 loss ($2,700 - $19), you'll likely be able to use some of it to offset future gains or continue deducting $3,000 annually until it's exhausted. Keep all your brokerage statements and any communications about the bankruptcy - the IRS could ask for documentation if they have questions about your worthless security deduction.
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