To answer, "how do I claim the loss"?, I would say that you would designate the shares as worthless on your 2020 tax return. There were events that occurred to the company in 2020 that I believe would clearly justify that. There are instructions in Form 1040 about how to designate worthless shares. You can review my posts here since early April about that. There are not many posts on this Board so you should have no trouble finding them.
I took the loss in that way. I could have done the following other things, but chose not to:
I didn't let my broker buy my shares for basically nothing. This would put the stock sale in their 1099 to me and be a record that the stock was sold at a total loss, but I would lose the opportunity of recovering if TMPS somehow could have value again. I realize this is extremely unlikely, of course, but there is no need to give up your shares when you can declare them worthless on your tax return.
I didn't wait until 2021 to declare the shares worthless. There will be no events that can happen in 2021 that will make the shares worthless since by the end of 2020 they were already worthless. The IRS is apparently picky about when you can declare a stock worthless. If you declare a stock worthless in a year that is too late, the IRS can disallow it. I am not sure whether a "courtesy sale" defeats that problem with the IRS. The IRS could say that the sale doesn't prove the stock wasn't worthless and instead actually had a tiny value at time of sale. They could just say the broker did a "courtesy" of not charging you or "giving you a penny" to get the shares off of the account, but the shares were worth zero earlier and you sold in a year too late. I realize that this scenario also is highly unlikely to be a problem.
Well, we all lost on this one. I suspect everyone will take their loss one way or another and that will be the end of it. But I hope that my information is useful to you. I also hope we never find ourselves in this situation again!
Always be on guard for misleading, deceptive or erroneous messages. I am not an investment professional. My messages are my opinion only, and are subject to change when contrary information is later relied upon. Always do your own research.
AI
