Circuit City stock: Sell it and take the tax loss

— -- A: Electronics retailer Circuit City has short-circuited for investors.

Facing stiff competition from both online and bricks-and-mortar retailers, Circuit City filed for bankruptcy protection in November. You can read more about it here. Then in January, the company said it would liquidate. That is, sell off its assets and close its stores.

Sorry about your loss, although, I'm glad you didn't risk too much. If you check my column index, you'll see that Ask Matt readers have been warned several times against investing in Circuit City.

At this point, the Circuit City stock has stopped trading on the New York Stock Exchange and now trades on the lightly regulated Pink Sheets under the ticker symbol CCTYQ. The "Q" indicates the company is in bankruptcy.

Owning shares of companies in bankruptcy protection, much less in liquidation, is almost always a bad idea, as you can learn here.

You should consider Circuit City a tax loss. If you sell the stock, you can use the loss, including comissions, to offset other capital gains you may have. And if you have a larger loss than you have gains, you can use up to $3,000 of excess losses to offset ordinary income.

Before you sell, just be careful to check what the commission will be. Some brokers may charge large fees to sell Pink Sheet stocks.

Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at mkrantz@usatoday.com. Click here to see previous Ask Matt columns.