How To Sell Worthless Stock

 

When buying stocks, the situation of the company you have stocks for may go awry. Their sales may drop because of the fact that the company did not advertise itself properly, because of scandals, because the products they are offering are no longer required by the market or have been replaced by newer, more efficient ones belonging to other rival companies.

In any case, things do go bad, and when they do, you’re usually left with worthless stocks with a value of as little as fractions of a cent (as little as 0.00001$) that nobody wants to buy, because investing in a stock that is already dead generally doesn’t ever work.

First off, what is a worthless stock?

A worthless stock is, as the name says, a stock that does not value at anything. Even if a stock is valued at a few cents still means it has a market value and is not considered worthless. Also, if the company goes into bankruptcy does not mean their stocks become worthless even if their prices do plummet. As stated above, a stock becomes worthless when its value drops to small fractions of the smallest currency.

When you have worthless stocks, you should leave all hopes of selling them to another person aside. If the company you invested in is not yet in bankruptcy, they may still recover from their value drop with proper advertising and some form of innovation in the  market they specialize in, that will appeal to the general public and will raise sales so that the value of their stocks increases to a better level once again.

If this rare scenario does happen, it’s a good idea to get rid of your stocks as soon as you find the price they have risen to acceptable, as they will most likely go down to worthless status once again when the hype dies down.

Where to sell them?

Most brokerage agencies have something called “worthless securities”. Worthless securities are the easiest way of getting rid of worthless stocks. While you may get money back, you will be able to take the stagnating stocks that you have in your possession that nobody would ever buy. Also, any tax that still would have to be paid for the worthless stocks will be taken off your hands and will no longer cause an even bigger hole in your pocket than the purchase of the now-worthless stocks has.

The worthless security system works like this: when your stocks drop down to worthless status (conditions mentioned above), within the year they become worthless you may fill in an application for the worthless security system that your broker has in order. With a small commission fee (usually no bigger than 10$) your broker will take full possession of the worthless stocks alongside its tax problems.

Of course, you can’t just throw away your worthless stocks and all of their issues to your broker. Many brokerage agencies have certain rules and specifications which have to be met before they will accept to liquidate your worthless stocks. Nonetheless, it is the easiest way of getting rid of the pain of having worthless stocks in your possession.

References:

http://www.bankrate.com/finance/money-guides/writing-off-a-worthless-stock.aspx

http://www.howtodothings.com/how-to-sell-your-worthless-stocks-for-a-tax-write-off

http://www.kiplinger.com/columns/taxtips/archive/2006/tax0313.html


Rinkesh Kukreja is a part time passionate blogger, technology enthusiast, The founder and editor of HowZzDat - How of Everything. He started out with one website as a hobby and now loves writing articles on various niche.

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