How to Sell Worthless Stock

Q Can I claim a loss on worthless stock without selling the

shares?

— F.T., Erie, Pa.

A You might, but you'll have to determine whether your stock qualifies as "worthless" according to IRS rules. It's often simpler to just sell. If selling through your broker isn't worth it, you can sell the shares to a friend (or cousin, aunt or uncle) for pennies. (But not to a spouse, siblings, parents, grandparents or lineal descendants.) Here's one way to do it:

(1) Get the actual stock certificates from your broker. (2) Formally sell the shares, with a payment check and bill of sale. (3) Sign over the stock certificate (on its back) to the buyer. Have the signatures verified by your banker and/or a local stockbroker. (4) Send the certificate to the stock's transfer agent, explaining that the shares have been sold. Ask them to cancel the old shares and issue a new certificate to the new owner.

Some brokerages will buy your shares for a penny as a service to customers. Learn more at www.irs.gov and www.fool.com/taxes.

Q I see that the I Bond is paying zero percent right now. Should I be worried?

— C.M., Mason City, Iowa

A I Bonds feature returns that keep up with inflation, which was recently negative. Their interest rates have two components. There's a fixed rate that lasts for 30 years and an inflation rate that changes every May 1 and Nov. 1. If you expect inflation to rise in the future, as many do, I Bonds will help you keep up with it. They won't pay zero percent forever. (Still, consider top-quality dividend-paying stocks, instead, as they offer income plus probable capital appreciation over time.)

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