Drone Services USA Inc. (DSUS)

[Cassandra]

Caution! Obtain tax advice only from an accountant or an attorney.

One's "intent" regarding a stock has no bearing in the IRS rules. Although one may be able to file returns writing off any number of things that don't actually qualify and not get caught, if one is audited there could be serious consequences.

The only safe way to claim a loss on a worthless penny stock that is to have it removed from your portfolio. This can be done in a worthless securities transaction in which the broker buys all your shares for $.01 (aka "penny for the lot" transaction). Brokers have different requirements for doing this but after 2008, it became easier through "abandonment" of the stock.

If you have offered your stock for sale at market for several weeks or months and haven't been able to sell, you may want to ask your broker to do this kind of transaction for you. In this case, it is documented as a sale and reported to the IRS.

These transactions are required to be reported to FINRA and show as occurring at the lowest price of $.0001/share. With many completely dead stocks, most or all of the volume shown is actually such trades.

PVEC still trades and, through accounting fraud, shows positive net worth (shareholder equity). Trying to do a write-off without ridding one's portfolio of the stock is very risky. It's doubtful that one could provide the required documentation to prove it being worthless if it is still held.

Also, most OTC penny stocks including PVEC don't have registered stock so there is no registration for the SEC to revoke (which would eliminate the ticker). Their tickers can remain in your portfolio in perpetuity -- long after all evidence of life is gone.

When they (your broker) gets them off the books...their own matter not yours.

The IRS would not agree with this statement. Neither would a broker who is not about to take the risk of your writing off a stock you still hold.

Some references:

http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p124501.pdf

http://www.irs.gov/publications/p550/ch04.html#en_US_2013_publink100010315

http://taxation.lawyers.com/income-tax/tax-deduction-for-worthless-securities.html

http://covenantbank.com/covenantbank/LinkClick.aspx?fileticket=QJL37d1Ejh4=&tabid=75