A company must meet certain requirements to be listed on a major stock exchange, such as trading at a minimum share price and making financial disclosures promptly.The shares are de listed if they don't meet the requirements.If you own delisted shares, you can sell them on the OTCBB or Pink Sheets, which have more relaxed regulations.This level of risk is not suitable for beginners.If you have a loss, you can write it off on your taxes.
Step 1: The company's performance should be researched.
If you know more about the company and its history, you can reduce some of the risks in OTC trading.The company's website has company news and press releases.To get a sense of the company's financial well-being, review annual reports for several years.Listen to the two most recent calls to get a sense of what's going on in the company and how its executives are handling the situation.Look beyond the company to get a sense of its reputation and what other investors and experts in the industry are saying about it.
Step 2: Stock analysts give reports and estimates.
Recent reports from analysts can help you predict what will happen with your delisted shares.How to time the sell of your shares can be determined by estimates from analysts.When a company is delisted, institutional investors may have to sell their shares.The OTC market could be flooded with shares if significant numbers of shares are held by institutional investors.
Step 3: The company was delisted.
It is possible that a company is involuntarily delisted because it failed to meet minimum standards.Companies can delist from an exchange.A company that has filed for bankruptcy may temporarily delist its stock.If your research shows that the company is likely to come out of bankruptcy on a relatively healthy footing, your shares may be worth more than they would be if they were delisted.If the company has filed for bankruptcy, be careful.Trading stock in a bankrupt company is not a good idea.
Step 4: Listen to what other investors are doing.
As investors react to the delisting of a company, the prices of shares may vary wildly.If other investors are still buying the stock, you should track the price.OTC markets are vulnerable to manipulation, so be wary of big moves, especially a significant increase in the price of the stock.
Step 5: Decide what you want to get out of the stock.
Depending on how long you've had the stock, you may be able to get a minimum price for it.This is the amount at which you are comfortable selling the stock.If you're not interested in trading on the OTC market, you may want to get rid of the stock as soon as possible.You may be able to get a better deal with a little bit of patience.OTC markets have low-price stocks that attract smaller investors who are interested in playing the markets for bigger payoffs.You have the potential for a larger return if you wait out some of the volatility.
Step 6: A broker is what you should choose.
Before you start trading OTC shares, you should open an account with a broker-dealer.Your broker-dealer handles the trading and reporting process while you make your own investment decisions.If you don't already have a broker, look for one online with an intuitive platform that you can easily navigate.Flat commissions are charged by the best OTC trading firms.The account minimums should be paid attention to as well.Some brokers don't require a minimum account balance, while others do.Lower commission and fees may be charged by those with higher account minimums.
Step 7: Define your order for your broker-dealer.
Place a limit order or market order with your broker-dealer based on your research.The exact price you're willing to accept in exchange for your shares can be specified with a limit order.If you want the shares sold quickly and are willing to take whatever is the best offer, choose a market order.If your research shows that the company has filed for bankruptcy, you would want a market order.Suppose the company had a good reputation and was going through a rough patch.The company is predicted to rebound after an investor came through with funds the company needed to make it through.You would probably want a limit order.
Step 8: The trade needs to be confirmed.
Tell your broker-dealer the type of order you want.They execute the trade.Search for another broker-dealer with a matching investor or complete the trade internally.Depending on market fluctuations, your broker-dealer may have to adjust the price you set in your order.If the price you specified in a limit order is more than the current price of the stock, your broker-dealer would have to lower it.Before your broker-dealer completes the trade, they will seek confirmation from you that you are willing and able to complete the transaction at the terms offered.If your broker-dealer completes the trade internally, they must give you the best- available quoted price.
Step 9: The trade needs to be settled.
You have to deliver your shares to the buyer before the trade is complete.Ensuring the proper settlement of the trade is the responsibility of your broker-dealer.The broker-dealer is responsible for reporting the trade.
Step 10: You can find out the company's status.
You may be able to write off the shares as a loss on your taxes if they are for a company that has gone out of business.You have to sell your stock before you can write it off as a loss on your taxes.It would be difficult to sell your shares if the company no longer exists.You can write off your shares as a loss on your taxes if you talk to a tax professional.You may not be able to claim the full amount that you paid.
Step 11: You should talk to your broker.
Many brokers buy stock from their customers.You can get rid of the stock and get a trade confirmation for it.Regulations require all registered broker-dealers to give investors at least the best quoted price for worthless stock.If you just want to get rid of the stock and don't like OTC trading at all, this might be the best option for you.
Step 12: The sale can be reported on Form 8949.
Form 8949 can be used to provide information to the IRS about the sale of your shares.You'll be prompted to enter this information if you use an online tax preparation service.The difference between the adjusted basis of the stock and the amount you sold it is called your loss.The adjusted basis for stock is the amount you paid for your shares plus the cost of the purchase.The paper form can be downloaded from the IRS website.
Step 13: Schedule D can be used to summarize your capital gains and losses.
Capital investments are in the stock market.Real estate, equipment, and furniture are other capital assets.Losses from personal-use property, such as your home or your car, can't be deducted, but investments in stocks always can.The paper form can be downloaded from the IRS website.You have to report capital gains or losses on your tax return if you sell stock.Capital losses are related to capital gains.They are calculated separately from your other income, such as wages or income from a business.
Step 14: You can deduct your loss from your taxes.
It's likely that the sale of delisted shares was a loss for you.If you have capital losses, deduct them from your capital gains.You can still deduct up to $3,000 if your losses exceed your gains.The rest of your loss can be carried over to the next year.