If you own securities, including stocks, and they become totally worthless, you can take a deduction for a loss, but not for a bad debt.

Worthless securities are treated as though they were capital assets sold on the last day of the tax year. Report this claim for loss from worthless securities on Form 1040, Schedule D (PDF), in Part 1 or 2 depending on whether you held the stock short term or long term, and write "Worthless" in the applicable column of Schedule D. Keep in mind that recordkeeping requirements for claims for a loss from worthless securities require that you keep your records for 7 years. For additional information, refer to Chapter 4 of Publication 550, Investment Income and Expenses (Including Capital Gains and Losses) and Publication 552, Recordkeeping for Individuals. For more information on bad debts, refer to Tax Topic 453, Bad Debt Deduction.

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