Sell to Protect from Bankruptcy
Sell When The Company Goes Bankrupt
If a company files for what’s called Chapter 11, it’s on the verge of bankruptcy and your investment may be at risk. If you then sell the shares at a loss, it will at least be able to offset future capital gains for tax purposes.
Chapter 11 is a chapter of Title 11, the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States.
That said, when you sell a stock at a profit, remember that you are locking in gains, not losses. Sometimes, the stock may rise after you’ve sold it. This will sting, but there are always more opportunities to discover. Make sure to stick to your original strategy and make rational decisions while keeping the tax impact in mind when selling!