Bought a stock and the company went bankrupt, what do I do?

Question:

I wanted to learn more about stocks, so I opened an Ameritrade account a few years ago so I could experiment. I bought some shares in the telecom company Mcleod USA and in January the company came out of bankruptcy, and cancelled all of its stock. If the stock was cancelled, why is it still in my portfolio at the last price it traded at? Shouldn't it automatically become a loss? I tried to ask someone at Ameritrade but they got me confused. They said I could turn the stock over to them for a $25 fee. I don't get this. Please help me understand what I should do. Thank you.

Answer:
McLeod cancelled its shares, so they are no longer traded - anywhere or at any price. The the shares are worthless, regardless of how Ameritrade shows them in your account or wants to charge you for taking them off your hands.
http://www.lightreading.com/document.asp...

You can take your tax loss this year.
http://finance.yahoo.com/taxes/investing...

The problem is tax write off. As long as you still own the stock and it is quoted on the pink sheet, it can not be written off your taxes. There is an exceptions to this rule.

If the quote on the pink sheet is so little that the broker commission would cost more that you would receive, it is considered worthless for tax purposes. You can then report it on your schedule D as having been sold for $0.00 on December 31 of your tax year and write beside the notation "worthless"

Here is the link explaining the rule

place a market order and see what happens.

If you have famous company like Enron, IRS automatically know it, you will claim it as a loss on your investment up to 3000/year allowablble by IRS. the 25$ fee is the for certification for a bankrupt company.. You give Ameritrade 25$, they give you a statement for your loss as a proof for IRS

Bought a stock and the company went bankrupt, what do I do?

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