client's stock losses due to a broker's bankruptcy

[HOPE2]

Before I set on, just a note of thanks for all the help community members have given to those who always have questions.

How should a client's stock losses due to a broker's bankruptcy be reported on their tax return, and are there any specific IRS rules or forms to consider?

[Jim-from-Ohio]

What was the nature of the loss?  Stock went to zero or money just gone? Wasn't the account covered by the clearing house.. Pershing, National Financial Services, etc.

[George4Tacks]

The stocks are possibly still there. The SEC will often step in and take care of the investor as best they can. You (or the client) need to do more research. 

https://www.investopedia.com/articles/investing/050515/what-happens-when-stock-broker-goes-bust.asp#....

[HOPE2]

Yes, Puxin Ltd is considered bankrupt as of April 2022, when a Cayman Islands court ordered the company to be wound up following a creditors' petition, effectively placing it in liquidation. 

Key points about Puxin Ltd's bankruptcy:

• Court order: The Grand Court of the Cayman Islands issued a winding-up order against Puxin Ltd.
• Reason: A creditors' petition was filed against the company.
• Status: Currently considered in official liquidation.

[BobKamman]

My Google search shows that Puxin is a Chinese company in receivership, not a broker.  "Trading of the American depositary shares representing the Company’s ordinary shares has been suspended by the New York Stock Exchange as of May 3, 2022."  

[Skylane]

In general, you can’t take a loss on a stock until it is sold or declared worthless.