In order to cash a paper stock certificate you must sell the shares. When you have the paper stock certificate in your possession, the sale will usually take longer since you must send the stock certificate to the company’s transfer agent or to a broker. Despite this, many people prefer to hold the paper stock certificates. If the shares are registered to you, as they are with paper stock certificates, the company keeps you informed via annual reports and other information. Paper stock certificates are often easier to use as collateral.
Open an account with a discount broker. Discount brokerage houses, particularly online brokers, charge smaller commissions as a rule. Alternatively you can use a regular broker or the company’s transfer agent to sell the paper stock certificates. However, the transaction cost will probably be higher.
Complete and sign the transfer of ownership section located on the back of the stock certificate. You may wish to contact the broker/transfer agent to make sure you complete the transfer correctly. While you are at it, ask for the broker/transfer agent’s mailing address if you don’t have it already (you can usually find it on their website as well).
Take the paper stock certificate to your post office and send it to the broker/transfer agent by certified mail. If the stock is valuable enough, you should insure it as well.
Wait until the shares are credited to your account (this will take a few days). Once the shares are in your account, place a sell order with the broker or transfer agent. The shares will be sold on the market and the proceeds (minus transaction costs) credited to your account.
When you sell shares of stock you must report any profits as a short or long term capital gain on your tax return. If you took a loss on the investment, you’ll still want to report the transaction so you can deduct the capital loss from your taxable income.
Tips and warnings
- When you sell shares of stock you must report any profits as a short or long term capital gain on your tax return. If you took a loss on the investment, you’ll still want to report the transaction so you can deduct the capital loss from your taxable income.