Can You Deduct Worthless Stock. If you complete the transaction by december 31, you'll be able to deduct the loss on your 2008 taxes. The irs says a stock is worthless when a taxpayer can show that the security had value at the end of the year preceding the deduction year and that an identifiable event caused a loss in the deduction year.
The cares act temporarily reinstated the nol carryback provisions by extending the carryback period to five taxable years for losses originating. 165 (b) provides that the amount of the loss is determined by reference to the property’s adjusted basis as provided in sec. Financial difficulties won't make a company's stock worthless unless there is no hope that the company will pull through.