What if your stock investment (company) goes bankrupt

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Mr.BB
Posts: 1047
Joined: Sun May 08, 2016 10:10 am

What if your stock investment (company) goes bankrupt

Post by Mr.BB » Sun Dec 30, 2018 9:39 am

I was having this discussion with my cousin the other day and couldn't figure out the answer.
If you bought shares in a company and a few years later the company goes bankrupt, what happens to the value of your shares and taxes?
I assume when you look at your brokerage account online, the value of your stock would be zero?
Would their be any kind of 1099 form for taxes?
Is there any tax loss harvesting or is stock holding simply just dissolved?
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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SpringMan
Posts: 5409
Joined: Wed Mar 21, 2007 11:32 am
Location: Michigan

Re: What if your stock investment (company) goes bankrupt

Post by SpringMan » Sun Dec 30, 2018 9:48 am

Generally common stock holders will lose everything they invested when a company goes under. Bond holders would generally get paid but not always. In a taxable account you can write off your losses. No special 1099 forms needed. You lose what your cost basis was. This is why Bogleheads shy away from individual stocks and prefer funds.
Best Wishes, SpringMan

runner3081
Posts: 2525
Joined: Mon Aug 22, 2016 3:22 pm

Re: What if your stock investment (company) goes bankrupt

Post by runner3081 » Sun Dec 30, 2018 10:30 am

I had a few of these, they sit with a value of nearly nothing for a period of time and then my brokerage eventually closed out the position as a loss of worthless securities.

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