Worthless Securities Law and Legal Definition
Worthless securities are securities having a market value of zero. It includes stocks or bonds that are either publicly traded or privately held. These securities result in a capital loss for the owner and a loss can be claimed for worthless securities when filing taxes.
The following is an example of a federal statute on worthless securities:
26 USCS § 165 (g). “If any security which is a capital asset becomes worthless during the taxable year, the loss resulting therefrom shall be treated as a loss from the sale or exchange, on the last day of the taxable year, of a capital asset.”