A loss from a worthless security is always treated as a short-term capital loss.

Name: A loss from a worthless security is always treated as a short-term capital loss.
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A loss from a worthless security is generally treated as a long-term capital loss, assuming the security was held for more than one year. This is because the tax code treats the security as having been sold on the last day of the tax year in which it became worthless.

A Loss from a Worthless Security Is Always Treated as a Short-Term