No - that’s true if you are trying to determine if you can write it off, but if you actually sell it back for $1, you can take the loss.
If I sell something I bought for $1 million for $1 in an arm's length transaction, I'm realizing a loss of $999,999 even if the asset was worth $500,000. And it'd be a rational decision if it cost me $5 million in opportunity costs to do that $500k sale.
https://www.irs.gov/taxtopics/tc409
> When you sell a capital asset, the difference between the adjusted basis in the asset and the amount you realized from the sale is a capital gain or a capital loss.
Am I misinterpreting this?