Worthless securities (1040)

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Per IRS regulations, when investment income and expenses, stocks, stock rights, and bonds became worthless during the tax year, they are treated as sold on the last day of the tax year.

To report worthless securities on Form 8949:

  1. Open the B&D screen of the Broker screen, located in the Income folder. Only use the Broker screen if you are entering a consolidated broker statement.
  2. From the B&D screen, open the Schedule for detail statement. Or from the Broker screen, open the Proceeds statement.
  3. Choose a code in the TSJ field. For the Broker screen, close the statement and code the entire screen to TSJ.
  4. Choose the appropriate code in the 8949 Box field.
  5. Choose a code in the Type field.
  6. Complete the Desc field.
  7. Enter Wrthlss in the Date Sold field.
  8. Complete the Sales Price and Cost/Basis fields.
  9. UltraTax CS defaults to short-term treatment when the Date Sold field is WORTHLSS and the Date Acq’d field has a date in the same tax year. You may change the holding period to long-term by using the Force field.
  10. Use other fields in this statement as necessary for your client or to get your desired result on Form 8949.

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