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Q. Worthless Brother-In-Law, Worthless Stock. But Is It A Worthwhile Deduction?

Against all common sense, I listened to my brother-in-law about investing in a stock he promised was a “sure- fire winner.” It went down in flames and became worthless last year. Can I take a bad debt deduction on my tax return?

A. We can’t help you with your brother-in-law (next time, consider your source), but we can give you some good news!! If you own securities and they become totally worthless, you can take a deduction for a loss, but not for a bad debt.

The worthless securities are treated as though they were capital assets sold on the last day of the tax year if they were capital assets in your hands. You can use www.ezTaxReturn.com to help you report your worthless securities and take your deduction, but, unfortunately, we cannot help you with your worthless brother-in-law problem (though we suggest that you write him off when it comes to ever taking his financial advice).