Many Brokers Help Sell Worthless Stock To Secure Write-Off

QIn my E-Trade account I have 100 shares of a company that is now listed on the pink sheets and last sold for $0.0001 per share. I tried to sell the shares, but nothing happened. I lost $319 and want to take a tax loss. What can I do?

AYou generally need to sell shares to be able to write off the loss. But if the company goes completely out of business and there isn't anything left for shareholders, then you can deduct the loss as a worthless security without selling it.

But, as you've discovered, sometimes a company is in limbo -- with the shares still technically trading but nobody buying them. In that case, your broker may help take the shares off your hands so you can write off the loss.

Many brokers have special rules for buying nearly worthless stock from customers. E-Trade, for example, charges a $5 commission to buy shares in a worthless-securities liquidation, which provides you with a trade confirmation for your tax records.

Charles Schwab offers a courtesy sale for people who can't sell their shares. Schwab adjusts the commission to be the same amount as the sale price of the shares, so the net ends up being $0.

TD Ameritrade can purchase lots of shares for $1. Clients are charged the standard online commission of $9.99, minus the $1 received for the sale of the shares. If the client does not have enough cash in the account to cover the cost of the commission, TD Ameritrade will work with him or her to settle the trade. Clients cannot complete this transaction online and must call TD Ameritrade's toll-free number.

Call your brokerage firm to find out the rules and procedures for dealing with nearly worthless stock.

Richard Humphrey, the reader who wrote to us, went to the service center at E-Trade's Web site, found a screen with E-Trade's offer to buy his worthless stock and paid a $5 commission.

"I took care of my problem in two minutes," he said.