multiple choice: Stacy, who is married and sole shareholder of ABC Corporation,
ID: 2385954 • Letter: M
Question
multiple choice:Stacy, who is married and sole shareholder of ABC Corporation, sold all of her stock in the corporation for $100,000. Stacy had organized the corporation in 1999 by contributing $225,000 and receiving all of the capital stock of the corporation. ABC Corporation is a domestic
corporation engaged in the manufacturing of ski parkas. The stock in ABC Corporation qualified as Sec. 1244 stock. The sale results in a (n)
A. ordinary loss of $125,000.
B. long-term capital loss of $125,000.
C. long-term capital loss of $100,000 and ordinary loss of $25,000.
D. ordinary loss of $100,000 and long-term capital loss of $25,000.
Explanation / Answer
D. ordinary loss of $100,000 and long-term capital loss of $25,000. Up to $100,000 on a joint return of loss realized on disposition of Section 1244 stock is treated as an ordinary loss. So the first $100,000 would be ordinary and the remaining $25,000 woudl be a LTCL.
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